Dollar stays poised to start the new week

USD/JPY rocketed higher on the session. As I post its up more a big figure from its early lows. Concerns seem to centre on the vote in the Diet today for Prime Minister, although its expected that incumbent PM Ishiba has done enough to secure victory. He will lead a minority government, which is a recipe for ongoing political volatility in the country. Also of note on the session was the Bank of Japan Summary of Opinions, which reported some disagreement amongst policy makers on the next rate hike. On balance the Summary provided no clear indication of a rate hike in December.

Apart from JPY, major FX rates traded small ranges only.

Over the weekend we had the latest China consumer price inflation data, along with producer prices. The CPI rose at its slowest rate in 4 months and the PPI fell even further into deflation. USD/CNH dipped Monday but has since recovered to be higher on the session.

From New Zealand we had data from the Reserve Bank of New Zealand on inflation expectations. The two-year moved a little higher, but remained near the midpoint of the central bank’s target band. The one-year dropped a touch. NZD/USD has done little.

In geopolitics (impacting Chinese equities), the US Department of Commerce sent a letter to TSMC imposing export restrictions on certain sophisticated chips. This weighed on the price of the shares, although dozens of other semiconductor A-Shares are limit up.

Bitcoin approached US$2K.

The Australian dollar steadied around $0.659 on Monday after a sharp 1.4% drop in the previous session as China’s latest stimulus announcements fell short of market expectations.

On Friday, China announced a 10 trillion yuan debt package aimed at easing local government financing and supporting weak economic growth, but stopped short of unveiling direct economic stimulus.

Concerns about the potential global impact of a Donald Trump presidency, particularly on China, are once again in focus for investors.

Domestically, traders are looking ahead to key economic data, including Australia’s third-quarter wages report on Wednesday and the monthly jobs data on Thursday, to help shape the outlook for interest rates.

Additionally, Reserve Bank of Australia Governor Michele Bullock will participate in a panel discussion with other regulators on Thursday, adding further attention to the week’s events.

The Japanese yen depreciated past 153 per dollar on Monday as the summary of opinions from the Bank of Japan’s October policy meeting revealed divisions among policymakers over the timing of future interest rate hikes.

Some members expressed concerns about global economic uncertainties and rising market volatility, particularly with regard to the yen’s depreciation.

Despite these worries, the central bank has forecast that it could raise its benchmark policy rate to 1% by the second half of the 2025 fiscal year.

The yen had already come under pressure last week as the dollar strengthened following Donald Trump’s victory in the US presidential election.

However, the yen managed to recover some ground after Japanese officials intensified their verbal warnings against excessive yen declines.

On Friday, Finance Minister Katsunobu Kato stated that Japan would take "appropriate action" to address extreme foreign exchange fluctuations.

USD/JPY is nearly 100 points hihger on the session.

The only items of significance we've had today are the leadership vote coming up in parliament:

• Japan Prime Minister Ishiba faces leadership vote in parliament today

Which seems to be dipping into the sordid/farcical:

• Head of key Japan opposition party admits to extra-marital affair

And BOJ Summary:

• BOJ Summary (Oct.): Yen's depreciation has significant effects
• "BOJ divided on rate hike timing" - USD/JPY pops a little higher on the session