JPY: USD/JPY - Stalls Above 154.00 As The Yen Is Bought In The Crosses
The overnight range was 153.32 - 153.76, Asia is currently trading around 153.65. The pair has pulled back from the 154/155 area as the Yen gets bought heavily in the crosses on the back of the pullback in risk. While this backdrop plays out I suspect the resistance around the 154/155 area should continue to offer solid resistance. Look for dips to continue to be supported while above 149-150, first support is toward the 151.50/152.00 area and then the more important 149.00-150.00 level.
- MNI BoJ Review-Oct 2025: Focus On Dec Vs Jan Hike Risks: The BoJ held rates steady, as expected, at the end Oct policy meeting. Focus remains on hike risks at the Dec or Jan meetings, with no clear consensus on when the central bank will tighten rates further. Our bias rests with a Jan move, as the central bank seeks more information, particularly on wages, before deciding to act again. Still, a Dec move can't be ruled out. The Q4 Tankan report (out a few days before the Dec meeting) will be closely watched. Market pricing doesn't have a hike priced in until further into 2026.
- MNI POLICY: Ueda Dec 1 Speech Crucial For BOJ Hike Timing. It will be crucial for determining the probability of a rate hike at the Dec 18-19 policy-setting meeting, with a bullish economic and price assessment indicating that Bank executives see a chance of reducing the degree of easy policy at the year’s final meeting, MNI understands.
- Options : Close significant option expiries for NY cut, based on DTCC data: 150.65($450m). Upcoming Close Strikes : 155.00($1.81b Nov 6), 155.35($1.38b Nov 6) - BBG.
- Data/Event : Monetary Base
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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BOJ: Takaichi - BOJ & Govt Need To Work Closely On Economic Policy
Market pricing at the end of last week, priced in a BoJ Oct rate hike at a close to 58% (per WIRP on BBG). The implied rate was a touch above 0.62%, against a current effective policy rate of 0.477%. A full 25bps hike is not priced until the Jan/Mar meetings of next yea (implied rate of 0.75% for March 2026 meeting). For the Sep 2026 contract we sat at 0.96%. Focus in the first part of trade today will be on fallout from Takaichi's surprise LDP election victory on Saturday. The expected new PM has been vocal in her criticism of BoJ policy hikes in the past, although the stance softened during this recent LDP leadership campaign.
- Most notably from 2024 (when Takaichi competed for the leadership position with Ishiba), she stated raising rates was stupid. However, more recently she stated that the BoJ should keep rates unchanged (via BBG). She added that the government should set the direction for fiscal and monetary policy.
- Headlines that crossed in the aftermath of her victory on Saturday stated she believes that the BOJ and the government must work closely together on economic policy and that the government would need to consider if the current accord with the BOJ is the best (via BBG).
- From a sell-side standpoint, SocGen noted after the leadership result: "We had previously predicted the BoJ's next rate hike would occur in October, but given (1) the result of yesterday's LDP presidential election and (2) the US government shutdown and growing concerns about a further economic downturn, we changed our forecast to December."
- Goldman Sachs didn't see major implications in the near term for its viewpoint: "We believe the outcome of this LDP presidential election will not have a significant impact on the BOJ's monetary policy for the time being. This is because the impact of tariff hikes has started to appear in the data, such as a decline in manufacturers' recurring profits, and under these circumstances, we expect the BOJ to leave the policy rate unchanged for the time being from a risk management perspective. We continue to expect a rate hike in January 2026 as our base case scenario, with a rate hike in December this year as a sub-scenario."
- Looking ahead, Takaichi's remarks will be scrutinized closely. On the data front, we get Aug household spending figures tomorrow, then on Wednesday labor earnings data is out.
ASIA: Coming Up In Asian Markets On Monday
| 0430BST | 1130HKT | 1430AEDT | Thailand Sep CPI |
| 0600BST | 1300HKT | 1600AEDT | India Sep F HSBC PMI Services |
Source: Bloomberg Finance L.P/MNI
ASIA: Coming Up In Asia Pac Markets On Monday
| 0100BST | 0800HKT | 1100AEDT | New Zealand ANZ Sep Commodity Price |
| 0100BST | 0800HKT | 1100AEDT | Australia Sep Melbourne Institute Inflation Gauge |
Source: Bloomberg Finance L.P./MNI
