ForexLive Asia-Pacific FX news wrap: USD/JPY loses a little ground

• Bloomberg: China Weighs Removing Major Homebuying Curbs to Boost Demand
• Federal Reserve Bank of Philadelphia President Harker speaking on Friday
• China’s electricity consumption rose 8.9% year on year in August
• RBA meting next week – preview – to leave the cash rate on hold at 4.35%
• Bank of Japan leaves rates unchanged, as widely expected
• European Central Bank President Lagarde speaking Friday
• Reports of China state banks buying USD/CNY
• New Zealand PM Luxon says constrained by limited fiscal space
• Bank of Canada Governor Tiff Macklem will speak on AI on Friday
• PBOC sets USD/ CNY reference rate for today at 7.0644 (vs. estimate at 7.0637)
• China leaves 1- and 5-year Loan Prime Rates (LPR) unchanged
• Bank of England Monetary Policy Committee member Mann speaking Friday
• ICYMI – China’s state planner promises more stimulus (describes as ‘incremental’)
• Japan data – August CPI Headline +3.0% y/y (vs. 3.0% expected)
• UK consumer confidence September: -20 (vs. -13 expected). Lowest since March 2024.
• CBA shifts expected RBA rate cut timing to December 2024 (from November)
• AUD/USD support: RBA on hold with strong jobs market, sticky CPI; Fed policy divergence
• BlackRock is wary of the Federal Reserve 50bp rate cut, watch the word “recalibration”
• UBS forecasting many more Federal Reserve rate cuts, forecast S&P 500 to 6200
• More info – Goldman Sachs sees Fed cutting by 25 bps at each meeting until June next year
• ICYMI: US Treas Sec Yellen said the Fed rate cut is ‘very positive sign’ for economy
• Forexlive Americas FX news wrap: Dollar softer as the market digests the Fed decision
• Major US stock indices close sharply higher helped by foreign buying after Fed rate cut
• Trade ideas thread – Friday, 20 September, insightful charts, technical analysis, ideas

The
3 main focal points of the session were Japanese inflation data and
policy decisions from the People’s Bank of China and Bank of Japan.

The
August core CPI in Japan (prices excluding fresh food) rose 2.8% y/y,
up from 2.7% in July for its fourth straight month of
acceleration. This is encouraging news for the Bank of Japan.

Later
in the session brought the BoJ policy decision. The Bank left short
term rates unchanged, as was widely expected.

USD/JPY
traded a little lower on the session, touching 142.00 after the BoJ
announcement.
Still to come from the Bank, Governor Ueda will hold a news
conference at 0630 GMT (0230 US Eastern time).

The
other notable event of the session was the People’s Bank of China
setting its Loan Prime Rates (LPR). There were expectations (not
unanimous) that the Bank would cut these. The 50bp rate cut from the
US Federal Reserve mid-week was seen as giving the PBoC a little more
policy flexibility. However, the Bank left both the 1-year and 5-year
LPRs unchanged, at 3.35% and 3.85% respectively. The PBOC has shifted
to the 7-day repo rate as being the main signal of policy, this too
was left unchanged today, at 1.7%.

At
the setting of the onshore yuan reference rate today the PBoC dropped
USD/CNY (raised CNY) to its weakest level (strongest for CNY) since
the end of May 2023. The setting was also the biggest
one-day fall
for USD/CNY (rise for CNY) since
March
2023.

News
crossed also that China is considering removing some of the largest
remaining restrictions on home purchases. This is an effort to boost
the property sector and, in turn, the economy.

The
yuan strengthened again during its trading session. There were
reports that major Chinese state banks were seen buying USD/CNY in an
effort to slow the rise of the yuan.

This article was written by Eamonn Sheridan at www.forexlive.com.