SOUTH KOREA: BOK Press Release Key Points
- The Monetary Policy Board of the Bank of Korea decided today to leave the Base Rate unchanged at 2.50% today describing inflation as stable and economic growth in an upward trend thanks to improving consumption and exports (driven by semi conductor demand).
- The board felt that it is necessary to further monitor financial stability conditions, such as the effects of real estate market stabilization measures on housing markets in Seoul and its surrounding areas and on household debt, as well as exchange rate volatility given trade negotiations remaining outstanding. .
- They currently suggest that the global economy is expected to slow modestly in growth and experience a divergence in inflation trajectories across countries as the impact of U.S. tariff increases starts to materialize.
- The BOK sees the growth rate as generally consistent with the August forecast of 0.9% for this year and of 1.6% for next year, noting that both upside and downside uncertainties have increased, stemming from factors such as trade negotiations between Korea and the U.S. and between the U.S. and China, developments in the semiconductor industry, and the pace of recovery in domestic demand.
- The BOK next meets November 27.
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FOREX: JPY Crosses - Mixed Performance
US Equities, just another day and another all-time high, nothing stops this train. This morning US futures have opened a little lower, E-minis -0.02%, NQU5 -0.02%. The JPY performance in the crosses is pretty mixed with EUR/JPY trying to regain its upwards momentum and the rest seem to be stalling or in NZD/JPY’s case moving lower.
- EUR/JPY - Overnight range 173.84 - 174.39, Asia is trading around 174.40. The pair has found decent buyers and is back up towards its recent highs looking to regain the momentum higher. First support seen back towards the 173.00 area.
- GBP/JPY - Overnight 199.38 - 199.79, Asia trades around 199.65. This pair could not extend its break higher and has failed again above 200.00. Buyers need to reassert the momentum higher again soon or the probability of a deeper pullback increases. First support seen back towards the 198.00 area.
- NZD/JPY - Overnight range 86.50 - 86.82, Asia is currently dealing 86.50. This pair remains the outlier thanks to the poor NZ GDP data last week, while below 88.00/88.50 I continue to have a bias lower. Anyone looking for a vehicle to express a long JPY in the crosses should look to this pair, if cross JPY does move lower NZD/JPY should lead.
- CNH/JPY - Overnight range 20.7515 - 20.8377, Asia is currently trading around 20.7500. This pair has remained above its pivotal 20.30/20.40 support. The pair continues to trade sideways comfortably within its recent 20.40-21.00 range.
Fig 1 : CNH/JPY 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA PRESS: HKEX Adds New Reference Rate Under Swap Connect
Hong Kong Exchanges and Clearing Limited (HKEX) announced Monday the addition of the one-year Loan Prime Rate into the floating reference rate options under Northbound Swap Connect, the latest in a series of initiatives to expand the scheme, Securities Daily reported. A total of 31 onshore and offshore institutions conducted 53 transactions of one-year LPR referenced interest rate swaps, with an aggregate nominal value of CNY6.46 billion. This will provide more tools for international investors to manage the interest rate risk of their yuan-denominated portfolio, the newspaper said.
