JAPAN: LDP Members Ballot Closed As Lawmakers Vote Looms (2/2)
Oct-03 09:51
As was the case with outgoing PM Shigeru Ishiba's unexpected win in 2024, the choices of those LDP lawmakers who backed failed candidates in the first round will prove crucial in determining the outcome. In that race, Takaichi won a plurality of the first round vote, boosted by her strong support among grassroot members. However, in the second round, Ishiba's ability to win over support from lawmakers from defeated candidates saw him come through as thewinner.
- Reports suggest Koizumi is drawing the broadest support among LDP lawmakers, but with a large number still undecided and the prospect of behind-closed-doors agreements, the contest remains too close to call.
- Japan Times: "In the lawmakers’ votes, Koizumi has maintained a consistent lead since campaigning began. Among the 295 [LDP lawmakers], over 80 support Koizumi, considerably higher than Hayashi (around 60) and Takaichi (around 40), a weekend poll by Nikkei-TV Tokyo found."
- Once the winner of the contest is announced, they will become PM designate. The National Diet is set to meet on 15 October to formally elect a new PM. Given that the LDP and its coalition partners, Komeito, do not command a majority in either chamber of the Diet, backing from one or more opposition parties will be required, which in turn is likely to see some pre-vote dealmaking by the new LDP leader.
Chart 1. Betting Market Implied Probability of LDP Presidential Election Winner, %
Source: Polymarket
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BONDS: Firmer As Oil Falls On OPEC+ Report & German Supply Passes Smoothly
Sep-03 09:49
Delayed reaction to the move lower in crude oil as bonds firm a little. Smooth passage of German 10-Year supply also noted.
- WTI & Brent lost a little over $0.80 apiece after RTRS sources noted that “OPEC+ will consider further raising oil production at a meeting on Sunday, as the group seeks to regain market share. Another boost would mean that OPEC+, which pumps about half of the world's oil, would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule”.
FOREX: AUDNZD at Fresh Cycle Highs, Eyes Medium-Term Resistance
Sep-03 09:48
- The latest comments from RBA’s Bullock on the current trend of spending potentially needing fewer rate cuts are underpinning some modest AUD strength today, which continues to be most notable against its antipodean counterpart. AUDNZD is back to the overnight session highs, and the highest level in six months.
- Initial strength for the cross during the APAC session followed a solid Q2 GDP reading in Australia. Data was stronger than both the RBA and consensus expected as it rebounded from Q1’s weather-impacted soft result and benefited from holidays. It rose 0.6% q/q to be up 1.8% y/y, the strongest since Q3 2023.
- The other leg of the trade has been fuelled by a dovish RBNZ, prompting AUDNZD to surge higher in recent weeks, breaking back above 1.1000 convincingly, and a breach of the key 1.1180 mark would place the cross at the highest level since late 2022. Above here, 1.1250 marks a significant 76.4% retracement point of the 2022 selloff.
- It is worth noting that S&P made comments on New Zealand overnight, stating they are “comfortable” with NZ’s sovereign rating outlook, though it’s closely watching the nation’s current account and budget deficits.
Source: Bloomberg Finance L.P. / MNI
OPTIONS: Expiries for Sep03 NY cut 1000ET (Source DTCC)
Sep-03 09:43
- EUR/USD: $1.1455(E2.2bln), $1.1525(E919mln), $1.1575-95(E1.5bln), $1.1600(E825mln), $1.1645-50(E792mln), $1.1675-80(E1.1bln), $1.1700(E1.1bln)
- USD/JPY: Y145.00($865mln), Y145.50($976mln), Y146.50($1.4bln), Y147.15-30($1.6bln), Y148.00($595mln), Y149.00($508mln)
- GBP/USD: $1.3500(Gbp507mln)
- AUD/USD: $0.6475(A$570mln)
