EUR/USD, USD/JPY flows - BoJ summary leans to Dec; US CPI main interest
BoJ summary suggests majority likely favoured Dec hike, bar a big financial shock
US CPI main focus today, 0.2% core expected
Much calmer overnight session, receding oil helping to bolster sentiment, and tech sentiment less heated, with even the Kospi managing a 4% bounce. FX also very subdued and some continued easing off in recent volatility.
BoJ summary of opinions from the Oct meeting suggested, even outside of the one usual hawk, a number of members favoured moving towards neutral soon or acting on rates while gauging financial conditions ‘over the course of a few months’ (i.e. quarterly pace). It’s not all one way though with clearly a more cautious camp on the board focused on soft consumption and some a little more focused on seeing the wage round in the spring. Net result though is that, bar ongoing significant shift in financial conditions from current market churn, Dec is still priced at around 2-in-3 probability.
Attention today very much back on data and US CPI. We look for a more neutral 0.2% print for core, on consensus though perhaps with scope for a small amount of ‘relief’ and brief kneejerk minor dollar reaction, given recent numbers have surprised high. After payrolls and while markets are not heading steeply down, odds of a Dec Fed hike are back up at 80-85%.