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Late
in the US afternoon (really late) Japan’s Finance Ministry’s Vice
Finance Minister for International Affairs Atsushi Mimura crossed the
newswires indicating that finance minister Kato met US Treasury
Secretary Yellen on Thursday. FX was one topic of discussion. I noted
at the time that earlier this year, when USD/JPY was surging up
towards 160 Yellen met with the prior set of officials from the
Ministry of Finance. Yellen was very cold on the idea of any US
participation to support the yen.
Mimiura added some ‘hot button’
intervention remarks (see bullet above), in brief:
have
recently seen one-sided, sharp fx movesvigilant
to FX moves including those driven by speculation
USD/JPY
barely moved on all this.
Tokyo
area inflation data was published a little later, with all three main
measures coming in under the Bank of Japan 2% target:
Headline
1.8% (down from 2.2% in September), under
2% for the first time in 5 months.Core
(i.e. excluding food) 1.8% (from 2.0% in September)Core-core
(i.e. excluding food and energy, this is closest to the US ‘core’
inflation definition) 1.8% (from 1.6% in September)
A
little later we had ‘services PPI’ for September, in at 2.6%
(from 2.7% in the prior month).
I’m
not convinced that lower CPI will stop the Bank of Japan from hiking
rates, they seem to be intent on doing so. The Bank meet next week
(30th
and 31st)
but are expected to remain on hold with a rate hike viewed as more
likely at the December or January meeting. Having said this, the yen
was sold a little on the data. USD/JPY popped to around 152.10 before
slipping back down to lows back under 151.80. Its around 151.85 or so
as I write.
We
had mild verbal intervention remarks from Japan’s economy minister.
From
China today was a Medium-term Lending Facility (MLF) injection that
did not fully offset the maturing amount. The rate on the new funds
made available was unchanged at 2%. China’s
mortgage rate cuts also came into effect today. More in the points
above.
Over
this coming weekend Japan goes to the polls for its general election.
The ruling LDP is expected to lose seats, but still be able to form
coalition government. Again, more in the points above.
Major
FX traded very small ranges, as did oil. Gold lost a little ground
This article was written by Eamonn Sheridan at www.forexlive.com.
