JPY verbal intervention:
China:
Other
Let’s
get Japan and the yen out of the way first and then on to China.
Inflation
data from Japan for September kicked the session off. All three of
the main measures came in at or above the Bank of Japan 2% target,
although two of them were lower than the previous month. I
expressed the view a few times that I don’t think the data is too
important for the Bank of Japan right now, they seem intent on hiking
regardless of what the readings are. Market consensus is swinging
(has swung?) towards a December rate hike, which is looking possible (its not
locked in by any means).
The
CPI data didn’t move the yen too much. USD/JPY was ticking quietly
around 150.20. That changed with some verbal intervention from
Atsushi Mimura, Japan’s vice finance minister for international
affairs, AKA ‘top currency diplomat’. Mimura
jumped straight into forthright comments, hitting hot buttons like:
- recent
yen moves somewhat rapid and one-sided - excess
volatility in FX market is undesirable
A
little later a Japanese government spokesman referred to the moves as
‘speculative’.
USD/JPY
fell away. But only a little. Back under 150.00 but not much lower
than 149.90. Its useful to remember that despite all the talk and
central bank decisions there is still a very wide policy gap between
US and Japanese rates, which tends to weigh against the JPY.
It
was a busy day from China. The details are in the points above, but
the main points:
- new
home prices fell at the fastest rate since 2015 - China
Q3 GDP came in at 4.6% y/y, better than expected (but do note that Q2
was revised a little lower) - Retail
sales for September came in much better than expected, and industrial
output also.
The
improvements in the September data were surprising. The stimulus
announcements began to roll out from September 24, so the month would
have been doing well even before these. That’s encouraging. So many
(me included) were disappointed by the announcements from China, but
given the data seems to be improving anyway perhaps its sufficient.
Oh, if you want to argue with me that Chinese data can be very
manipulated I don’t think I can counter you. Yeah, gotta be wary of
that.
But,
it didn’t stop there. The People’s Bank of China launched its
relending facility to help listed firms stock repurchases and
increasing shareholdings. In
addition, the Bank’s governor Pan Gongsheng flagged further rate
and RRR cuts to come.
Major Chinese banks announced deposit rate cuts, as expected.
One
last thing, and its US politics related. Given the race is so close,
and the Harris vs. Trump economic policies are quite different, its
going to be necessary to pay closer attention in the next two weeks
as we approach voting day. News crossed from ‘Politico’ a
reputable US politics site, that a ‘data dump’ is expected in
relation to Trump’s trial over his attempt to overturn his 2020
election loss. Trump wanted the information release delayed until
after the election, the judge has decided ‘no’. The documents are
said to be being released some time on Friday and may be something to
watch for. Or not, we’ll see.
Now,
having said all this, such a long wrap, major FX has not done a lot
today. Yen crosses were notable but USD/JPY has only had a 40 or so
point range. Chinese markets have been more active. Equities are up
slightly on the day so far.