BOJ: Dovish Nakamura Urges Caution On BoJ Rate Hikes, But Mkt Reaction Limited
BoJ board member Nakamura is speaking in Hiroshima currently. Headlines are crossing with a dovish lean.
- Nakamura has stated that he is personally not confident on the sustainability of wage growth, while also noting inflation is at risk of missing the 2% target from fiscal 2025 onwards (per RTRS).
- Nakamura also states that his growth forecast is below board median due to a chance consumers may hold off spending and capex could be delayed. He added consumption lack momentum.
- Further adjustments to easy policy settings should be done gradually, Nakamura stated.
- Such comments won't added fuel to near term rate hike expectations. However, Nakamura leans dovish already, so the comments are unlikely to be a huge surprise to the market.
- USD/JPY popped higher initially towards 150.70 as headlines cross, but follow through has been limited (we were last 150.50). JGB futures are holding slightly lower.
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AUD: Aussie Range Trading Ahead Of RBA & US Election
AUDUSD is little changed during APAC trading today with the RBA decision coming up and Americans about to go to the polls. The pair is around 0.6590, close to the intraday high after a low of 0.6579. Commodities are down moderately and equities are generally lower. The US dollar is slightly higher.
- AUDJPY is 0.1% higher at 100.30, close to the intraday peak. AUDNZD has trended gradually up and is around 1.1028. AUDEUR is up slightly at 0.6057 and AUDGBP +0.1% to 0.5086.
- Equities are selling off with the ASX down 0.5% and Hang Seng -0.4% but Nikkei up 1.1%. The S&P e-mini is off its lows to be down slightly Oil prices are flat with WTI at $71.45/bbl. Copper is up 0.1% and iron ore remains around $104-105/t.
- The RBA decision is coming up at 1430 AEST with Governor Bullock’s press conference at 1530 AEST. The Board is unanimously expected to leave rates at 4.35% but the statement and updated staff forecasts will be scrutinised for any changes in view (see RBA Preview here).
- Later US October services ISM/PMI and September trade print, as well as UK October services/composite PMIs. The eurogroup meeting continues and the ECB’s Lagarde and Schnabel speak.
STIR: RBA Dated OIS Little Changed Ahead Of RBA Policy Decision
RBA-dated OIS pricing is little changed today. However, the pricing for 2025 meetings remains 1-7bps above pre-CPI levels from last Wednesday.
- The market has 2bps of easing by year-end, with an 8% probability assigned to a 25bp rate cut at today’s meeting.
Figure 1: RBA-Dated OIS – Today Vs. Yesterday
Source: MNI – Market News / Bloomberg
CHINA PRESS: October New Loans To See Seasonal Decline
China’s new yuan loans could fall in October from September due to seasonal factors, but recent policy stimulus measures, especially for the housing market, would enhance banking credit supply capacity, Securities Daily reported, citing analysts. New yuan loans and aggregate finance are expected to be around CNY600 billion and CNY1.5 trillion in October, compared to September’s CNY1.59 trillion and CNY3.76 trillion, said Liang Si, a researcher at the Bank of China Research Institute, noting policy effects would have a time lag. The People’s Bank of China is set to release its monthly financial data next week.
