The
big news out of the Asian timezone today was the Bank of Japan
intervention to sell USD/JPY. Estimates of the amount of selling
ranged from USD30bn to USD50bn. The BoJ has to sell its foreign
reserves of USD for such intervention. USD/JPY, and yen crosses, were smashed lower, with USD/JPY dropping 400 points from its high circa 149.70. The
rebound was fierce also. As I update USD/JPY is not far from 149
again.
In
other, way less notable, central bank news an RBA speaker, Assistant
Governor Kent, repeated the message from the Bank that there are
further interest rate rises ahead (November 1 is the next meeting).
Kent also remarked on the falling AUD, saying that while the drop
against the USD has been large the trade-weighted index fall is not
nearly so great, saying its ‘narrow and modest’, and that this will mitigate the
risk of imported inflation. We’ll see about that.
Chinese
equity markets were slammed lower today. The Communist Party National
Congress is over, the window-dressing propping up of the market took
a breather.
Also
from China we had Q3 GDP data (improved from Q2) and September
economic activity data (retail sales slowed but industrial output
improved). China GDP looks on track for around 3% this year but there
are challenges in 2023 for the economy with the zero-COVID policy
seemingly still entrenched, the slumping property sector, combined
with the global economy slowing under the pressure of interest rate
hikes.
US
equity index futures opened strongly for the week but in the hours
following gave back some of their gap-up gains. The Federal Reserve
has headed into its quiet period (this began on Friday evening US
time). Its probably no coincidence that signalling from the Fed
heading into this was more supportive of asset prices.