- Kuroda: Recent yen weakening sharp, one sided
- BOJ's Adachi: Monetary policy does not directly contribute to FX moves
- PBOC sets yuan midpoint at 7.1105 vs 7.1086 previously
- Australia Westpac September leading index -0.1% m/m vs -0.1% prior
- US plans to signal replenishing the SPR at $67-72 per barrel
- Oil - private inventory survey shows a surprise draw in crude stockpiles
- Fed's Kashkari: If we can get more help from the supply side, don't need to do as much
- Kashkari: If not progress on inflation, don't see why rates couldn't go above 4.50%
- Rebel Conservatives ask for help from Labour to overthrow Liz Truss
Markets:
- Gold down $2 to $1649
- US 10-year yields up 2.5 bps to 4.02%
- S&P 500 futures up 30 points, or 0.8%
- WTI crude up $1.03 to $85.83
- NZD leads, EUR lags
Price action in Asia-Pacific trade was largely governed by the 15% rise in Netflix shares after reporting strong subscriber numbers. That put a bid into US equity futures and helped to add a modest lift to commodity currencies and GBP.
Looking ahead, the pound faces a much bigger risk from UK CPI later. That could swing the Bank of England probabilities in a big way. We're pricing in about a 65% likelihood of 100 bps vs 35% of 75 bps. Cable is also sorting through the gilt market and a high CPI could hurt gilts enough to get a counter-intuitive reaction in the pound so that needs to be watched closely.
Kuroda offered some tough talk on the yen but the market is past heeding warnings and is now focused on actions. Adachi's comments didn't indicate any shift in monetary policy but he did plant a few seeds. At some point YCC will have to end.
The news in the oil market wasn't a big market mover but private inventories were bullish and the White House essentially confirmed that the 15m barrels to be sold from the SPR were the ones pre-announced. USD/CAD is higher despite gains for oil and commodity currencies so that's a strange one.
