In the News

WHAT TO WATCH:

• New Zealand decides on rates
• Japan PMI
• South Korea industrial production

TUESDAY TRADING SESSIONS (as of ~3pm New York time):

• The Bloomberg Dollar Spot Index up 0.2%
  • Federal Reserve Bank of Cleveland President Loretta Mester left the door open for another rate hike in November if the economy continues to perform well
• Asia Pacific G-10 FX
  • USD/JPY down 0.7% to 148.87
    • Earlier, Japan’s currency reached 150.16 per dollar on Tuesday in New York trading, its cheapest since multidecade lows set in October 2022
  • “They came in fairly decisively just slightly above 150, no time wasted,” said Wells Fargo strategist Erik Nelson. “It really hinges on US yields. We think yields are very close to a peak so not expecting to see 155 print”
  • READ: Yen Surges From Weakest Level in a Year Amid Intervention Talk
  • “I think markets desperately want intervention so are reacting to the psychological level of 150,” said Helen Given, FX spot trader at Monex USA. “Because the Bank of Japan stressed the importance of seeing continuing strong economic data as a criterion of intervention, the move today looks like an overzealous market raising their expectations of policy change toward intervention at the next meeting”
    • She expects USD/JPY at 140 by year-end
  • AUD/USD fell 0.9% to 0.6304
  • NZD/USD fell 0.6% to 0.5909
    • The New Zealand dollar was among worst performers in the Group-of-10 currencies ahead of the rate decision
    • SURVEY: RBNZ Seen Holding Official Cash Rate at 5.50%
• Treasury 10-year yields rose 12.1bps to 4.80%; while the 5s30s curve steepened 5.6bps to 13.4bps

TOP NEWS:

• The Federal Reserve should hold interest rates at elevated levels “for a long time” to bring inflation back down to its 2% target, Atlanta Fed President Raphael Bostic said.
• Citigroup Inc. will combine its sales teams that offer foreign-exchange products to corporate chiefs and institutional investors, tapping a 20-year veteran of the firm to take the reins of the newly created division
• Chile’s government cut its forecast for gross domestic product growth this year to 0%, one day after a key economic indicator showed increasing odds of a recession.
• General Motors Co. and Toyota Motor Corp. posted double-digit gains in US new car sales for the just-ended quarter, showing car buyer appetite for vehicles remains hearty heading into the final months of the year.
• A rash of bedbug sightings across France is causing paranoia among travelers and becoming a sore spot for the government as Paris prepares to host the Olympics next year.

KEY VIEWS:

• AlphaSimplex Is Betting Against Yen Despite Intervention Risks
• Gundlach Says Bond Rally Capped By ‘Rising Interest-Rate Burden’
• State Street Bets on Fed ‘Dramatically’ Cutting Rates Next Year

DATA RELEASED TUESDAY:

• (Canada) Sept. Bloomberg Nanos Confidence, actual 50.7, prior 50.9
• (US) Aug. JOLTs Job Openings, actual 9.61m, est. 8.82m, prior 8.83m, revised 8.92m

ECONOMIC DATA (All times HK):

• 06:00: (AU) Sept. Judo Bank Australia PMI Servic, prior 50.5
  • 06:00: (AU) Sept. Judo Bank Australia PMI Compos, prior 50.2
• 07:00: (Skorea) Aug. Cyclical Leading Index Change, prior 0.4
  • 07:00: (Skorea) Aug. Industrial Production SA MoM, est. 0.2%, prior -2.0%
  • 07:00: (Skorea) Aug. Industrial Production YoY, est. -5.8%, prior -8.0%
  • 08:30: (Skorea) Sept. S&P Global South Korea PMI Mfg, prior 48.9
• 08:30: (Japan) Sept. Jibun Bank Japan PMI Composite, prior 51.8
  • 08:30: (Japan) Sept. Jibun Bank Japan PMI Services, prior 53.3
• 08:30: (SP) Sept. S&P Global Singapore PMI, prior 53.6
  • 16:00: Oct. Automobile COE Cat B (SGD), prior 140,889
  • 16:00: Oct. Automobile COE Cat A (SGD), prior 105,000
  • 16:00: Oct. Automobile COE Cat E (SGD), prior 144,640
• 09:00: (New Zealand) Oct. RBNZ Official Cash Rate, est. 5.50%, prior 5.50%
• (Philippines) Aug. Bank Lending Net of RRPs YoY, prior 7.7%
  • Aug. Money Supply M3 SRF YoY, prior 5.7%
  • Aug. Bank Lending YoY, prior 8.3%

CENTRAL BANKS (All times HK):

• 09:00: (New Zealand) RBNZ Monetary Policy Review
  • 09:00: Oct. RBNZ Official Cash Rate, est. 5.50%, prior 5.50%
• 09:10: (Japan) BOJ Outright Bond Purchase 1~3 Years
  • 09:10: BOJ Outright Bond Purchase 3~5 Years
  • 09:10: BOJ Outright Bond Purchase 10~25 Years
  • 09:10: BOJ Outright Bond Purchase 5~10 Years

BOND SALES/PURCHASES (All times HK):

• For corporate bonds, see New Issue Monitor
• 08:00: Australia to Sell A$800 Million 2.75% 2035 Bonds
• 09:30: Bank of Korea to Sell 2.5 Trillion Won 2-Year Bonds
• 10:30: South Korea to Sell 2.3 Trillion Won 30-Year Bonds

MARKETS AS OF 3pm New York time:

• USD/JPY -0.7% to 148.87 (range 147.43–150.16)
• EUR/USD little changed at 1.0474 (range 1.0448–1.0493)
• AUD/USD -0.9% to 0.6304 (range 0.6286–0.6369)
• NZD/USD -0.7% to 0.5908 (range 0.5888–0.5956)
• USD/CAD +0.2% to 1.3709 (range 1.3662–1.3736)
• GBP/USD little changed at 1.2085 (range 1.2052–1.2102)
• USD/CHF +0.3% to 0.9209 (range 0.9174–0.9244)
• 1-mo. USD/TWD NDF +0.1% to 32.322 (range 32.236–32.346)
• Bloomberg Dollar Spot Index +0.2% to 1,276.83 (range 1,273.48–1,279.01)
• JPM FX Volatility Index +3.4% to 8.50 (range 8.22–8.50)
• U.S. Stocks
  • S&P 500 -1.5% to 4,225.21 (range 4,216.45–4,281.15)
  • DJIA -1.4% to 32,979.02 (range 32,916.20–33,398.54)
• Commodities
  • WTI Crude +0.7% to $89.41/bbl (range $87.76–$90.27)
  • Gold -0.2% to $1,824/oz (range $1,815–$1,833)
  • Copper -0.6% to $3.62/lb (range $3.58–$3.65)

TECHNICAL OUTLOOK by Bloomberg strategist Robert Fullem

• USD/JPY —  Keeps bullish tone though drop below 21-DMA slows pace
  • Resistance: 150.01, upper Bollinger; 151.95, 2022 high
  • Support: 147.30, base line; 145.91, Sept. 11 low
• EUR/USD —  Bearish on new YTD low; oversold
  • Resistance 1.0737, Sept 20 high; 1.0769, Sept 12 high
  • Support: 1.0443, Dec. 7 low; 1.0406, 50% Fibo retracement of Sept low
• EUR/JPY —  Bearish drop below cloud and lower Bollinger; tests 100-DMA
  • Resistance: 158.76, upper Bollinger; 161.51, June 15 2007 low
  • Support: 155.59, Ichimoku cloud bottom; 155.26, June 16 high
• AUD/USD — Bearish bias on new YTD low below lower Bollinger
  • Resistance: 0.6485, upper Bollinger; 0.6596, June 29 high
  • Support: 0.6272, Nov. 3 low; 0.6170, Oct. 13 low
• NZD/USD —  Neutral to bearish below 55-DMA
  • Resistance: 0.5999, 55-DMA; 0.6118, Aug. 10 high
  • Support: 0.5863, lower Bollinger; 0.5841, Nov. 10 low
• USD/KRW —  Stays bullish ion new YTD high; gaps higher
  • Resistance: 1383.69, Nov. 8 low; 1399.81, Nov. 7 low
  • Support: 1315.68, Sept. 4 low; 1284.54, Aug. 8 high
• USD/SGD — Bullish tone in ascending Bollinger range
  • Resistance: 1.3730, upper Bollinger; 1.3765, Nov. 30 high
  • Support: 1.3658, 21-DMA; 1.3374, Aug. 1 high
• USD/MYR — Keeps bullish bias above 4.70 level
  • Resistance: 4.7370, Nov. 9 high; 4.7495, Nov. 4 high
  • Support: 4.6871, 21-DMA; 4.5895, Aug 11 high
• USD/INR — Bullish to neutral tone near YTD high, 21-DMA buoys
  • Resistance: 83.2738, YTD high; 83.2925, Oct. 20 high
  • Support: 82.5494, 100-DMA; 81.6100, April 27 low
• USD/IDR — Bullish as holds above 15400 level; overbought
  • Resistance: 15643, Jan. 6 YTD high; 15770, Dec. 29 high
  • Support: 15231, July 10 high; 14565, YTD low