Economy

BOJ rises, Boris bows out, Xi remains put By Stocksak

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© Stocksak. After his speech, the Chinese President Xi Jinping waves to the media as the new Politburo Standing Committee members meet the press following the 20th National Congress of the Communist Party of China at the Great Hall of the People, Beijing, China, October 23, 2022. RE

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Wayne Cole offers a glimpse at the day ahead on European and Global Markets.

Yen intervention, UK politics, China data dump

While being tight-lipped about their intentions, Japanese policymakers intervened once again to support yen. On Monday, the dollar fell to as low at 145.28 from its early peak of 149.70.

The BOJ appears to have failed to provide yen bears with better levels and liquidity. The dollar rallied quickly to around 149.00.

The BOJ is acting only under the MoF’s orders, but selling dollars for yen is at odds with its persistent commitment to ubereasy monetary policies. This will increase the pressure for a change at Friday’s policy meeting.

Kuroda, the BOJ boss, has not shown any signs of reversing his course ahead of his retirement next year. Markets might have to wait until a new face is available to see the end to YCC.

After Boris Johnson quit the leadership race and left former FinMin Rishi Sunak at the top, a new face is starting to emerge.

Sterling rose almost a cent in Asia to $1.1402, but it could not sustain that and it slipped back to $1.1330.

Investors will be concerned about the political uncertainty that is still ahead. Sunak isn’t loved by right-wingers in Tory and new divisions could flare up at any moment.

Beijing marked the rubber-stamping by Xi for a third term of leader by dumping a week worth of delayed data onto markets. Top forecasts were GDP (and industrial output), but retail sales disappointed, and house prices continued falling in a warning sign of the stretched property market.

Xi’s selection of loyalists to top policy positions didn’t seem to cheer investors. Blue chips fell more than 1% while the PBOC fixed yuan lower – one method of stimulating the economy.

Key developments that could provide additional direction to markets Monday:

The race for the UK PM position could be decided if Sunak does not get support of 100 MPs

U.S., European PMIs – October

News Source and Credit

Stocksak Editorial

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