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FOREX: JPY Hits Reverse as Ishiba Doubles Down on Defeating Deflation

FOREX
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  • Having held as the best performer across G10 FX on Tuesday, the JPY is weaker against all others headed into the Wednesday crossover, however EUR/JPY remains below both yesterday's highs and the down-trending 50-dma crossing today at Y160.60. Following Ishiba's formal ascension to the premiership Tuesday, today he has conducted meetings with BoJ's Ueda and reiterated his focus on defeating deflation - backed up by reports that the new cabiinet is unlikely to want the BoJ to rush into further tightening.
  • The volley of rockets from Iran to Israel hurt risk appetite in Tuesday trade, but markets have adopted the view that broader risk remains regionally contained - albeit with the still-elevated oil price. Brent crude futures remains north of $75/bbl - up over $3/bbl on the week, which continues to lend support to oil-tied FX including NOK and CAD. EUR/NOK has broken to weekly lows, nearing next support at the 11.6616 100-dma.
  • Today's ADP Employment Change stats will provide the latest look at the labour market ahead of Friday's payrolls release. Markets expect the ADP headline at +125k, an uptick from the prior of a similar magnitude to what consensus expects on Friday.
  • A litany of central bank speakers should also keep markets busy. ECB's Kazaks, Lane, Simkus, Elderson and Schnabel are all set to make appearances - and are likely to keep an October rate cut on table, echoing the near-universal view shift among the sell-side to a 25bps rate cut step on the 17th. Appearances from Fed's Bowman, Barkin and Musalem should also provide headline risk. Hammack of Cleveland is also due to make welcoming remarks, but policy-relevant commentary is unlikely. 
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  • Having held as the best performer across G10 FX on Tuesday, the JPY is weaker against all others headed into the Wednesday crossover, however EUR/JPY remains below both yesterday's highs and the down-trending 50-dma crossing today at Y160.60. Following Ishiba's formal ascension to the premiership Tuesday, today he has conducted meetings with BoJ's Ueda and reiterated his focus on defeating deflation - backed up by reports that the new cabiinet is unlikely to want the BoJ to rush into further tightening.
  • The volley of rockets from Iran to Israel hurt risk appetite in Tuesday trade, but markets have adopted the view that broader risk remains regionally contained - albeit with the still-elevated oil price. Brent crude futures remains north of $75/bbl - up over $3/bbl on the week, which continues to lend support to oil-tied FX including NOK and CAD. EUR/NOK has broken to weekly lows, nearing next support at the 11.6616 100-dma.
  • Today's ADP Employment Change stats will provide the latest look at the labour market ahead of Friday's payrolls release. Markets expect the ADP headline at +125k, an uptick from the prior of a similar magnitude to what consensus expects on Friday.
  • A litany of central bank speakers should also keep markets busy. ECB's Kazaks, Lane, Simkus, Elderson and Schnabel are all set to make appearances - and are likely to keep an October rate cut on table, echoing the near-universal view shift among the sell-side to a 25bps rate cut step on the 17th. Appearances from Fed's Bowman, Barkin and Musalem should also provide headline risk. Hammack of Cleveland is also due to make welcoming remarks, but policy-relevant commentary is unlikely.