PORTUGAL: EFSF Grants Waiver To Facilitate Early Repayments On Loans

• The softer dollar backdrop on Wednesday did allow USDJPY to move a good deal lower overnight, with Japanese yen traders still acutely aware of the building FX rhetoric in recent sessions. New weekly lows of 156.38 were put in with some analysts citing pressure into the Japanese fix, before spot recovered back to 157.00.
• As a reminder, last week’s rally back to 159.00 prompted several senior officials to start sounding the alarm on yen weakness once again. This was spearheaded by both President Trump and PM Takaichi, who broadly echoed the sentiment from most recent discussions between Treasury Secretary Bessent and Finance Minister Katayama.
• Japan’s currency chief Mimura then struck a more forceful tone, stating the market may be underestimating the coordinated message from both the US & Japan on supporting the yen.
• With coordinated FX intervention remaining a threat and the BOJ’s hiking cycle still playing out, the narrative surrounding the most attractive G10 funder continues to garner attention. With this in mind, it’s worth highlighting that CHFJPY made new pullback lows overnight, with 187.61 representing the lowest point since October 2025 for the cross.

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The Riksbank’s September meeting minutes feel in line with the tone of the statement/rate path from last week. Seim and Thedeen appear ready to hike in November, and remaining members support a hike “before year end”. A key strand through the minutes were concerns around the interaction between negative supply shocks (from the Middle East) and positive demand shocks (positive domestic momentum). Seim remains most hawkish, with Hjelm still at the dovish end of the Executive Board. 

• Seim: Didn’t vote for a hike in September because she wanted to give the economy “the benefit of the doubt”, but looks set to vote for a November hike. Demand and supply shock interactions again cited as an upside risk, and Seim also mentions that a potentially higher neutral rate is making current policy more stimulative. Overall, while she supports hikes, she doesn’t suggest a 2022-2023 style hiking cycle is needed yet.
• Thedeen: Looks ready to support a November hike, noting that “the need to support the recovery, which was the motive for cutting the policy rate from 2.25 to 1.75 per cent last year, no longer exists “. Thedeen is primarily concerned with the (upside) risks to the inflation forecast, rather than the spot forecast itself. As with colleagues, he notes supply/demand side interaction and also the weak krona in his remarks.
• Jansson: Believes interest rate rises (plural) are necessary, but doesn’t give much away on timing. When deciding on hikes, he wants “to have sufficient confidence that the forecasts will prove broadly accurate”. He still views the inflation picture as “relatively moderate” for now, but does stress the risk of interacting demand and supply shocks. He also devotes time to the exchange rate as an upside inflation risk.
• Bunge: Agrees it is likely that a hike will be delivered before year-end. While the rate path in 2027 is a “reasonable assessment” of how hikes should proceed, Bunge stresses that this “is something we will have to test our way forward”. She is focused on business price plans to assess inflation risks, particularly in a stronger demand environment.
• Hjlem: Hike in Q4 2026 still reasonable, but policy rate path still assessed to be slightly high. Focus on resource utilisation when assessing dual supply vs demand shocks. Believes the above-target inflation forecast is largely explained by indirect effects of supply shocks which “I assess to be contained in the forecast”