STIR: 50bp Of BoE Cuts Priced Through Dec After Labour Market Data

Ueda notes that too rapid a cut in bond purchases could risk destabilising the market, while outlining that the decision on bond tapering was based on market participant's opinions.

On rates, he re-iterated that the BOJ will continue raising rates if the economic outlook - which is not too different compared to the last MPM - is realised. The price trend is expected to be in line with the BOJ's target in the 2nd half of the outlook. 

• He notes that there are upside and downside risks to the economy and inflation, but that downside risks are currently larger for both variables.

• Overall the Dollar is flat against most G10s, the early interesting chart is still the AUDUSD, after the cross reached its best level since last November Yesterday.
• This level stands at 0.6552, and a clear follow through would open to 0.6582 High Nov 12 ‘24 and 0.6603 High Nov 11 ‘24.
• The Kiwi is the 2nd best early performer, and similar to the Aussie, the NZDUSD exchanged hands at its highest level since October Yesterday.
• Yesterday's printed high is at 0.6088, but it is most likely that Market Participants will be looking for the initial resistance circa 0.6106.

The BOJ press conference has started. Governor Ueda starts by discussing the decision on JGB purchases - all very much in line with the policy statement.

• A reminder that the BOJ announced that it would trim bond buying by ¥200bn/per quarter from April 2026 next year. The current pace had been at a reduction of ¥400bn per quarter. There was one dissenter to this decision, board member Tamura, who wanted to keep the pace around ¥400bn. He also argued that long term rates should be determined by the market.
• USDJPY is currently -0.1% lower on the session at 144.59.