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Published: 2025-10-08T05:10:55.000Z

Asia Summary and Highlights 8 Oct

-

RBNZ Cut by 50bps, more than expected

Japan August labor cash earning 1.5% y/y

Asia Session

The RBNZ has cut more than expected by 50bps and see the Kiwi getting slaughtered. A key factor behind Kiwi's slump apart from a double cut, is the forward guidance RBNZ has provided that they may cut further. While they have considered both 25 and 50bps cut, the spare capacity and Q2 contraction for NZ seems to have driven them towards a 50bps cut. NZD/USD is trading 0.98% lower at 0.5742. AUD/USD also 0.29% lower at 0.6526 while USD/CAD rises 0.11%. 

The Japan August labor cash earning came in at 1.5% y/y, slowing from the sub 3% growth in July. While the drag seems to be mostly base effect of one time special payment, it indicates the price/wage dynamics only continue to transit gradually. The one way traffic continues in USD/JPY as the diminishing anticipation of rate hikes cut the legs off JPY. USD/JPY is trading 0.34% higher at 152.40. But with JGB yields regaining traction and U.S. Treasury yields sluggish, the move maybe overdone. Else, the broad equity space is performing individually, EUR/USD is down 0.37% and GBP/USD is down 0.27%.

North American session

USD/JPY broke through 151 and accelerated in the afternoon getting close to 152. EUR/USD traded a relatively narrow range for most of the session, but eventually nudged below 1.1650. GBP/USD was a little more volatile, reversing an early dip below 1.34 as was a brief rise in EUR/GBP above .87. AUD/USD saw only marginal losses to .6580, while USD/CAD kept close to 1.3950. Canada reported a wider than expected August trade deficit of C$6.32bn but a stronger than expected September Ivey manufacturing PMI of 59.8. 

Equities and UST yields were lower as the government shutdown continues. The New York Fed reported slightly higher consumer inflation expectations in September. Fed’s Kashkari cautioned against excessive easing though Miran reiterated his dovish views, while Daly was positive on the impact of AI.  

 

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