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The yen spiked lower against its major counterparts earlier today thanks to a dovish BOJ meeting minutes release. Kiwi also saw some selling, though, after New Zealand printed a lower-than-expected quarterly inflation expectations report.

  • AU MI inflation gauge remains at 0.3% in October
  • NZ ANZ commodity prices slips by 0.3% vs. 0.8% gain in September
  • AU ANZ job ads shoots up by 1.4% vs. 0.7% decline in September
  • NZ inflation expectations (q/q) up by 2.0% vs. 2.1% uptick in Q2 2017
  • BOJ meeting minutes shows one member saying yield curve is not enough to achieve 2% target on schedule
  • BOJ’s Kuroda: inflation still “relatively weak” but will be boosted by rising wage costs

Major Events/Reports:

BOJ’s meeting minutes

With not a lot of fresh data on the docket, market players focused on the latest Bank of Japan (BOJ) meeting minutes.

BOJ members are still optimistic on the economy, saying that it will continue its “moderate expansion” and that “domestic demand was likely to follow an uptrend” as employment and income conditions improve.

Improvements in the emerging markets have also pushed exports “on an increasing trend,” while business fixed investment will likely “continue increasing moderately” on the back of higher corporate profits and “heightened growth expectations.”

On prices, members recognized that “prices had been relatively weak despite the steady tightening of labor market conditions” and moderate economic expansion. However, they’re also optimistic that the improvement in employment conditions and higher inflation expectations would soon raise prices higher.

What caught the investors’ attention was members becoming increasingly concerned over how long better labor conditions would lead to higher wages and prices. At the end of the day, “most members” felt it prudent to continue to “pursue powerful monetary easing under the current guideline for market operations.”

However, one member *cough* Kataoka *cough* took his concerns a step further and said that the current yield curve target of around zero percent “were not enough for 2% inflation to be achieved around fiscal 2019” and suggested that BOJ step up its easing efforts. Yipes!

It also didn’t help that Kuroda echoed the members’ cautious optimism over inflation, saying that it’s still weak but maintained that indicators point to better outlook. There were also talks of maybe modifying BOJ’s ETF purchase schedule, but Kuroda quickly defended that he doesn’t “see the need to change anything” for now.

Major Market Mover(s):

JPY

The yen spiked lower against its major counterparts but soon recovered most of its losses as soon as traders realized that Kuroda didn’t really offer anything new today.

USD/JPY shot up to 114.74 before settling down to 114.36;
EUR/JPY popped to a high of 133.12 before slipping back to 132.83;
AUD/JPY rose to 87.66 before falling back to 87.58, and
GBP/JPY hit 149.87 before settling to 149.56.

NZD

Kiwi started the week on weak (heh) footing thanks to a miss in New Zealand’s quarterly inflation expectations report.

NZD/USD is down by 18 pips (-0.26%) to .6891;
GBP/NZD is up by 52 pips (+0.28%) to 1.8975, and
AUD/NZD is up by 40 pips (+0.36%) to 1.1113.

Watch Out For:

  • 7:00 am GMT: Germany’s factory orders (-1.0% expected, 3.6% previous)
  • 8:15 am GMT: Switzerland’s CPI (-0.1% expected, 0.2% previous)
  • 8:15 am GMT: Spain’s services PMI (55.7 expected, 56.7 previous)
  • 8:45 am GMT: Italy’s services PMI (53.1 expected, 53.2 previous)
  • 8:50 am GMT: France’s final services PMI to remain at 57.4?
  • 8:55 am GMT: Germany’s final services PMI to remain at 55.2?
  • 9:00 am GMT: Euro Zone’s final services PMI expected to remain at 5.49
  • 9:30 am GMT: Euro Zone Sentix investor confidence (31.2 expected, 29.7 previous)
  • 10:00 am GMT: Euro Zone PPI (0.4% expected, 0.3% previous)