Asia Summary and Highlights 10 Oct
Japan September PPI +2.7% y/y
Japan FM Kato says recently seeing one-sided rapid moves
Asia Session
The September Japan PPI stays above 2% at +2.7% y/y with a +0.3% m/m. Such data continues to point towards more inflationary pressure for Japan and should be supportive for the BoJ to further tighten. However, market seems to be anticipating no such changes as the coming PM may have other ideas in mind. After a week of slaughter, we are finally hearing some jawboning from Japan FM Kato. It is just the usual rhetoric but is enough to temporary encourage speculators to take some profit off the table. USD/JPY turned lower by 0.19% to 152.74.
The broader risk sentiment seems to be sour. Despite U.S. major equities holding onto the green, regional equities are all in the red with the HSI and Nikkei both down more than a percent. USD is trading lower against majors and we see AUD/USD trading 0.16% higher at 0.6565, NZD/USD 0.19% higher at 0.5756 and USD/CAD slips 0.04%. Else, EUR/USD is up 0.09% and GBP/USD is up 0.06%.
North American session
USD/JPY saw a drop to an low of 152.14 after Japan’s LDP leader Takaichi said she had no intention of triggering an excessively weak JPY, but a rebound above 153 quickly followed. The USD was stronger across the board, USD/CAD breaking above 1.40 while AUD/USD fell from above .66 to below .6550. EUR/USD fell to 1.1550 from 1.1615 while GBP/USD after failing to return to 1.34 fell below 1.33.
There was not much news with data absent. UST yields were modestly higher and equities modestly lower. Fed’s Barr was quite hawkish on the tariff threat to inflation, but had little market impact.