JPY: USD/JPY - Breaks Back Below 156.00 As Ueda Signals Dec Hike Possible
The USD/JPY range today has been 155.43 - 156.20 in the Asia-Pac session, it is currently trading around 155.50, -0.45%. The pair has fallen away as Ueda puts a rate hike in December on the table, Japanese yields are extending higher and have put a real dampener on risk across the board. The move in the Yen looks like it might force the BOJ into action in December and with Hassett now the leading front-runner to replace Powell so is the market's confidence for US cuts. This is having an impact or at least slow what looked like a situation that was about to get out hand. Technically this pullback looks like it could have more to go, especially if the risk-off start to the week grows. The first big support is back toward the 153.00-155.00 area where I suspect buyers will remerge. On the day I suspect rallies will remain heavy in the short term while below the 156.20-156.50 area.
- MNI: BOJ's Ueda Says Raising Rate Will Not Slow Economy. He said on Monday that raising the policy interest rate under accommodative financial conditions should be seen as easing off the accelerator toward stable economic growth and price developments, rather than applying the brakes on economic activity. Ueda also expressed confidence in continued wage growth, saying that corporate profits, the source of wage hikes, are expected to remain high overall even after taking into account the impact of tariff policies
- (Bloomberg) -- Japan’s Ministry of Finance will auction about ¥2,600 billion of 2035 bonds on Tuesday and then ¥700 billion maturing 205
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($744m),156.00($794m). Upcoming Close Strikes : 153.00($1.2b Dec 4), 155.00($2.25b Dec 2) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 94 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
