Asia Summary and Highlights 30 Oct
The BoJ kept rates at 0.5% by a 7-2 vote
Asia Session
The BoJ has kept rates unchanged at 0.5% as per forecast. The vote is 7-2 with mostly unchanged economic forecast, 0.1% higher for 2026 core-core CPI. They continue to see inflation will be sustainably reaching 2% target in a medium term and downside risk for economics growth. There has been no mentioning of the potential disruption of new fiscal policy as we do not believe such has been fully formed yet. USD/JPY is trading 0.02% lower after having a figure of volatility on the release.
It is reported that Trump and Xi has met and talked about trade matter. The broader risk market is cheerful on the headline as market participants see it as a further gesture of de-escalation. Trump said he will be lowering tariffs by 10% while China will no longer limit rare-earth export and start purchasing soybeans. With Trump not being as upbeat as he used to be, there seems to be more than a grain of salt. Major U.S. equity indexes are in the green while regional Chinese and Hong Kong equities turned lower. AUD/USD is trading 0.28% higher at 0.6592, NZD/USD is trading 0.32% higher and USD/CAD slides 0.07%. Else, EUR/USD is up 0.22% and GBP/USD is up 0.12%.
North American session
The Bank of Canada eased by 25bps as expected but with the statement suggesting that if the economy evolved as expected rates were now at an appropriate level USD/CAD slipped from 1.3930 to touch below 1.39. The USD was generally slightly softer heading into the FOMC, EUR/USD rising to 1.1660 from 1.1640, but a dip in USD/JPY below 152 from 152.20 was corrected.
The FOMC eased by 25bps as expected. The USD saw a modest positive reaction to the statement, which saw economic activity expanding at a moderate pace and inflation having moved up since earlier in the year. USD gains accelerated in Chairman Powell’s press conference after he noted strong differences of opinion on policy going forward, and stated that a December easing was far from sure, in fact far from it. USD/JPY bounced to near 153 while EUR/USD fell to near 1.16. USD/CAD rebounded above pre-BoC levels to 1.3950.