ForexLive Asia-Pacific FX news wrap: Yen, oil both sharply lower

• Citi lowers its Q4 2024 Brent forecast to US$70/bbl (from $74/bbl)
• Bank of Canada Governor Tiff Macklem is speaking on Monday, October 28, 2024
• US election – Trump speaker calls Puerto Rico a pile of garbage, immediate backlash
• Reports that McDonald’s (MCD) is to resume selling Quarter Pounders in all restaurants
• PBOC sets USD/ CNY reference rate for today at 7.1307 (vs. estimate at 7.1311)
• China vice fin min says further stimulus details after National People’s Congress session
• ICYMI, People’s Bank of China open market outright reverse repo operations facility
• Weaker yen = stronger Nikkei relationship holding so far – Monday, October 28, 2024
• People’s Bank of China launches monthly reverse repo oerations to ensure liqudity
• More Asia FX verbal intervention – not the yen again (South Korea)
• Boeing said to be planning a US$15bn+ capital raising – as soon as Monday
• Japanese ruling coalition loses majority in election; USD/JPY reacts with volatility
• Asia FX verbal intervention comments – not on the yen! (South Korea)
• USD/JPY hits its highest since July 31
• Oil update – Brent (futures) circa $72
• Japan’s ruling coalition lost its majority in an election – yen lower to open the week
• China’s industrial profits collapse in September: -27.1% y/y (vs -17.8% y/y prior)
• Trade ideas thread – Monday, 28 October, insightful charts, technical analysis, ideas
• UK & European clocks changed over the weekend
• NZD traders heads up – New Zealand holiday today (Monday, October 28, 2024)
• ECB’s Knot says mkt maybe a bit over-enthusiastic on Bank rate cuts, on Dec: “we’ll see”
• Monday morning open levels – indicative forex prices – 28 October 2024 – YEN slammed lower
• USD/JPY is above 153 on the Japanese election result – yen plunge
• Israel strikes on Iran look designed to minimize the chance of retaliation
• Newsquawk Week Ahead: Highlights include US NFP, ISM Mfg, PCE, GDP, BoJ & UK Budget
• Weekly Market Outlook (28-01 November)

There
were two sharp moves in Asia today:

• the
  yen fell with Japan’s ruling party losing its majority
• oil
  slid on Middle East de-escalation

Since
this is ForexLive, first to JPY.

USD/JPY
(and yen crosses) opened higher in the very early hours of trade here
in Asia. It was a holiday today in New Zealand, which is the very
first major FX centre to open each week. USD/JPY was above 153.00
very quickly, chopping around there for a few hours before making its
way above 153.85 where it has topped out, so far at least.

The
news of note was the Japanese election. In (very) brief:

• 233
  seats in the lower house of the Diet are required to form a majority
• Japan’s
  ruling coalition lost its majority, with the latest I have seen
  showing the
  ruling LDP with its coalition partner Komeito on a combined
  215
• Most
  likely now is that LDP/K will bring a third party into the coalition
  and continue to govern

But
the yen has been hit due to

• a
  perception that policy normalisation may face political pressure to
  proceed more slowly. Cost-of-living pressures in Japan are an
  important political issue and its thought that a slowing of policy
  normalisation (rate hikes) may be a price extracted by a third party
  for agreement to support the LDP.
• straight
  up political instability until a new government is formed, and given
  a 3-way agreement now required any government will have a higher
  potential for instability

As
a reminder, Prime Minister Shigeru Ishiba dissolved the Lower House
only eight days after assuming office. Which seems was poor
judgement. Can he last?

The
lower yen played a role in Japanese stocks rising.

As
for oil, the Israeli strikes
on Iran targeted only military sites, sparing oil facilities, which
allowed Iran’s oil operations to remain unaffected. That’s the
very brief and simplified version of events, and very valid. Further,
there are reports that Iran’s air defence is now completely
compromised. Further still,
the demonstrated
stark reality
of the huge disparity between Israeli (Western-backed) capability and
Iran’s (Russia-backed) capabilities will also dissuade Iran from
escalation. Oil prices were slashed on a perception
that threats to supply have diminished. As I update Brent is under
USD72.50.

Elsewhere in FX moves have been subdued. As I post the USD is gaining a little. EUR, AUD, GBP, CAD, NZD – all a little lower against the big dollar. ——————

In
other market news:

• Boeing
  is said to be planning a US$15bn+ capital raising as soon as today.
• The
  People’s Bank of China launched a new monthly reverse repo facility
  (see bullets above)

In
US election news:

• The Trump campaign has faced a backlash from
  high-profile Puerto Ricans and other Latins, due to a comment at
  Trump’s New York rally from a warm up act calling Puerto Rico
  “literally a floating island of garbage”. With the election so
  close and the race so tight the risk of alienating a large swath of
  voters (circa 5 million people of Puerto Rican origin live on the
  mainland USA can vote) like this could be impactful.
• Some Republican heavyweights have taken to social media to disavow the comments in a sign of how seriously this is being taken by those in the party with nous &/or in areas with a strong Latin presence.

See
bullets above for more on all of these.

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