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Not a lot of fresh catalysts rocked the market boats, but the return of Asia-based traders as well as themes from the previous session livened up volatility in the last couple of hours.

  • Japan’s services producer price index up by 1.3% in August vs. 1.1% expected and previous
  • Trump and Moon Jae-in sign renegotiated free trade agreement

Major Events/Reports:

BOJ’s meeting minutes

It seems like more and more Bank of Japan (BOJ) members are now calling for a more sustainable way to stimulate consumer prices.

In their meeting minutes printed earlier, we saw that some members now believe that it’s “necessary to
pay close attention to the side effects” of monetary easing if they want to extend their plans.

Public confidence in the BOJ’s commitment to inflation is key, it seems.

A clearer forward guidance was brought on the table, while “conducting market operations and asset purchases in a more flexible manner” and allowing long-term yields to “move upward and downward to some extent” also received support.

Overall, the minutes supported the BOJ’s recent efforts in making its easy policies more sustainable. Of course, it will probably be up to Governor Kuroda to make sure that markets don’t see their latest biases as signs of tightening or tapering.

Trade-related updates

In a presser earlier today, China’s Vice Commerce Minister Wang Shouwen shared that it’s difficult to hold negotiations with the U.S. putting a “knife to China’s neck.”

The remarks followed the release of Beijing’s white paper detailing that “[n]egotiations cannot be conducted under the threat of tariffs, or at the cost of China’s right to development.

Meanwhile, Trump has just signed a re-negotiated trade deal with South Korea that includes lifting a cap on U.S. car exports that don’t meet Korea’s safety standards and extending the period of a 25% tariff on Korean trucks.

Analysts point out that the new United States-Korea Free Trade Agreement (KORUS) terms are actually cosmetic but, hey, a win is a win, right?

Low key risk-taking in the markets

There were no new bombshells during the Asian session, but the return of Chinese, Japanese, and South Korean traders from a long weekend might have pushed the Asian bourses higher across the board:

  • Nikkei is up by 0.17% to 23,910.9
  • A SX 200 is up by 0.03% to 6,186.6
  • Shanghai index is up down by 0.76% to 2,776.332
  • Hang Seng is down by 1.62% to 27,499.4

Commodity prices were also a bit more predictable, with gold dipping some on a bit of dollar strength while crude oil prices extended their gains after OPEC shrugged off pressure to flood the market with more oil supplies.

  • Gold is down by 0.04% to $1,198.26 per troy ounce
  • Brent crude oil is up by 0.04% to $81.41 per barrel
  • U.S. WTI is up by 0.07% to $72.24 per barrel

Major Market Mover(s):

CHF

There were no direct catalysts for the franc, but a “jump” in USD/CHF’s prices ahead of the FOMC statement might have pulled franc pairs up amidst a relatively quiet trading session.

USD/CHF is up by 21 pips (+0.21%) to .9664; EUR/CHF is up by 18 pips (+0.16%) to 1.1345; GBP/CHF is up by 15 pips (+0.12%) to 1.2663; CHF/JPY is down by 14 pips (-0.12%) to 116.76, and NZD/CHF is up by 7 pips (+0.11%) to .6414.

USD

The dollar inched higher against its major counterparts ahead of tomorrow’s FOMC statement where the Governor Powell and his team are widely expected to raise their interest rates by another 25 basis points.

EUR/USD is down by 8 pips (-0.07%) to 1.1739; GBP/USD is down by 14 pips (-0.11%) to 1.3103; USD/JPY is up by 8 pips (+0.07%) to 112.85; AUD/USD is down by 11 pips (-0.14%) to .7242, and NZD/USD is down by 7 pips (-0.10%) to .6637.

Watch Out For:

  • 5:35 am GMT: BOJ Governor Kuroda to give a speech
  • 6:00 am GMT: Germany’s wholesale price index (0.2% expected, 0.0% previous)
  • 8:40 am GMT: BOE MPC member Vlieghe to give a speech in London