Core Viewpoint - The upcoming meeting between Bank of Japan Governor Kazuo Ueda and Prime Minister Sanae Takaichi is anticipated to provide insights into the timing of potential interest rate hikes by the central bank, especially in light of the yen's recent decline to a nine-month low [1][2]. Group 1: Meeting Context - Ueda's first bilateral meeting with Takaichi is scheduled for Tuesday, following their previous encounter at a government panel meeting [4]. - This meeting is significant as it marks Takaichi's first formal discussion with Ueda since her appointment, and it typically occurs after a new prime minister takes office [4]. Group 2: Economic Implications - Takaichi has expressed concerns regarding the potential for interest rate hikes, advocating for the BOJ to align its actions with government efforts to stimulate the economy [2][5]. - Market speculation suggests that Takaichi's dovish stance may lead to increased government spending and pressure on the BOJ to delay rate increases, which could further weaken the yen and raise import costs [2][3]. Group 3: Rate Hike Expectations - Many market participants anticipate that the BOJ may raise rates from 0.5% to 0.75% either in December or January, given that inflation has exceeded the 2% target for over three years [6]. - Ueda has hinted at a potential rate hike, but Takaichi's policy adviser cautioned against immediate increases due to recent economic data indicating a contraction in Japan's economy [6][7].

Core Viewpoint - The US dollar is expected to be more sensitive to poor economic data releases than to positive ones, indicating a need to reassess its outlook in the near future [1]. Economic Data Focus - Key economic indicators to watch include labor data and Consumer Price Index (CPI) data, which may be influenced by recent shutdowns [2]. Market Positioning - Recent ADP data release led to a significant sell-off of the dollar, suggesting that market positioning has shifted, with less short interest in the dollar compared to earlier in the year [3]. - Despite being the worst-performing G10 currency year-to-date, the dollar has shown resilience in the second half of the year [3]. Currency Performance - The Norwegian krona was the best performer following the recent data release, while the dollar had been the top G10 currency performer in the previous week [4]. Outlook for the Dollar - There is a need to reassess the dollar's outlook against other currencies, particularly the euro and Japanese yen, as the latter shows signs of potential intervention from Japanese authorities [5][6]. Japanese Yen Dynamics - The new finance minister of Japan appears increasingly uncomfortable with the yen's performance, hinting at possible interest rate hikes or intervention from the Bank of Japan [6][7]. - The market is cautious about the yen's movements, particularly around the 0.55 level, indicating a significant focus on the yen's story in the current economic landscape [7].

Dollar Outlook - Rabobank认为，未来几周美元对疲软数据将更加敏感[1] - 市场对美元的空头头寸已减少，美元走势趋于平衡[3][4] - 美元年初至今表现不佳，但在下半年表现良好[3] Key Data to Watch - 劳动力数据和CPI数据是关注重点，但十月份的数据可能受到shutdown的影响[2] - ADP数据对美元的影响显示市场不再过度做空美元[3] Currency Dynamics - 挪威克朗在数据公布后表现最佳[4] - 日元面临日本新任财务大臣的口头干预风险，日本央行可能在12月加息[5][6] - 市场对日元汇率0.55保持警惕[7] Global Factors - 美元走向不明朗，多种货币（欧元、日元、英镑）的故事都在发生，但美元是共同因素[5][7]

By Leika Kihara TOKYO (Reuters) -The Bank of Japan's cautious governor has dropped unusually hawkish hints of an interest rate hike in December or January next year, with the timing likely swayed not just by wage momentum but by moves in the yen. The central bank kept interest rates steady at 0.5% on Thursday as expected, but Governor Kazuo Ueda said the likelihood of its baseline scenario materialising has heightened - language he had used in the past to signal a rate hike was imminent. While warning o ...

By Gregor Stuart Hunter SINGAPORE (Reuters) -Asian stocks veered between gains and losses on Thursday after U.S. President Donald Trump said he had made a deal with Chinese President Xi Jinping on rare earths and tariffs, while the yen weakened after the Bank of Japan kept interest rates on hold. After a near two-hour meeting with Xi, Trump said he had agreed to reduce tariffs on imports from China in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking d ...

Group 1 - Bank of Japan (BOJ) Governor Kazuo Ueda indicated that the central bank will analyze various data, including information from Washington, to decide on potential interest rate hikes in October [1][4] - Ueda noted the resilience of global and U.S. economies, while acknowledging that the impact of U.S. tariffs may soon become apparent [2] - The International Monetary Fund (IMF) raised its 2025 global growth forecast, attributing the more benign tariff shocks to a potential slowdown in output due to renewed U.S.-China trade tensions [3] Group 2 - The BOJ ended a decade-long stimulus program last year and raised rates to 0.5% in January, believing Japan was close to achieving its inflation target [5] - With inflation exceeding the 2% target for over three years, the BOJ is prepared to continue raising rates if economic conditions improve [5] - Market expectations for a rate hike in October increased after two BOJ board members proposed a rate increase in September, although these expectations diminished following the election of Sanae Takaichi as Japan's first female prime minister [6] Group 3 - Analysts generally expect the BOJ to raise rates to 0.75% by January next year, although there is some disagreement regarding the exact timing [7]

Core Viewpoint - The political landscape for the Bank of Japan (BOJ) is expected to become more challenging for Governor Kazuo Ueda following the leadership victory of Sanae Takaichi, who is critical of interest rate hikes. This shift may impact the BOJ's policy decisions moving forward [6]. Group 1: Political Environment and Leadership Changes - Takaichi's victory has led to a significant reduction in traders' expectations for a BOJ rate hike in October, dropping from a 68% chance to just over 20% [6]. - Ueda's ability to raise interest rates may be hindered by Takaichi's influence, as she has expressed a desire for cautious monetary policy [7][9]. - The appointment of former finance ministers to senior party positions suggests that Takaichi may not pursue aggressive spending plans without approval from the finance ministry [10]. Group 2: Economic Indicators and Market Reactions - Recent solid economic data had previously increased expectations for an October rate hike, but Takaichi's win has diminished that likelihood [3]. - Analysts are concerned that if Ueda does not raise rates, it may signal a response to Takaichi's victory, potentially leading to further yen depreciation [4]. - The market reacted to Takaichi's comments with initial weakness in the yen and an increase in long-term bond yields, although the situation stabilized shortly thereafter [9]. Group 3: BOJ's Policy Direction and Challenges - Ueda has made significant strides in unwinding the BOJ's extensive stimulus program, but the political dynamics introduced by Takaichi may complicate future policy changes [2][12]. - There are concerns that Takaichi's approach could lead to a reevaluation of the BOJ's independence, particularly if she seeks to influence monetary policy decisions [6][11]. - Economists believe that while Ueda has performed well in managing the BOJ's policies, the challenges are far from over, especially with potential adjustments needed in response to Takaichi's fiscal strategies [16].

Core Viewpoint - The Bank of Japan (BOJ) is on track to achieve its inflation target, but uncertainties in the global economy may hinder wage increases, leaving the decision on interest rate hikes open for October [1][2]. Economic Outlook - Ueda highlighted various uncertainties affecting Japan's economic outlook, including signs of labor market weakness in the U.S. and the potential impact of higher U.S. tariffs on Japanese corporate profits [2][6]. - The BOJ is prepared to raise interest rates if economic conditions align with forecasts, but external factors may lead firms to prioritize cost-cutting over wage increases [2][6]. Market Reaction - Following Ueda's comments, the Japanese yen weakened by 0.3% to 147.72 per U.S. dollar, as market participants interpreted the remarks as reducing the likelihood of an October rate hike [3]. - Analysts suggest that a rate hike in December is now more probable than in October due to the lack of clear signals for an immediate increase [3]. Impact of U.S. Economic Conditions - The ongoing U.S. government shutdown is expected to delay the release of key economic data, complicating the BOJ's decision-making process regarding interest rates [4]. - Ueda acknowledged that while the delay in U.S. data is a significant issue, the BOJ will analyze other available data to inform its decisions [4]. Future Considerations - Ueda plans to gather insights from discussions with policymakers and bankers during the upcoming IMF meeting, indicating that the global economic outlook will influence the BOJ's decision on potential rate hikes [5]. - The BOJ is aware of the significant uncertainties regarding how tariffs may impact global, U.S., and Japanese economies, but it does not need to wait for all data to assess risks [6][7].

Economic Outlook - Bank of Japan Governor Kazuo Ueda indicated that inflation is on track to meet the bank's target, but global uncertainties may hinder firms from increasing wages, leaving the decision on interest rate hikes open for October [1][2] - Ueda highlighted various uncertainties affecting Japan's economic outlook, including signs of labor market weakness in the U.S. and the anticipated impact of higher U.S. tariffs on Japanese corporate profits [2][3] Monetary Policy - Ueda stated that the future trajectory of the U.S. economy and its monetary policy could significantly influence Japan's economy and prices, emphasizing the need for close monitoring of the situation [3][5] - The Japanese yen weakened by 0.2% to 147.60 per U.S. dollar following Ueda's comments, as market participants interpreted them as reducing the likelihood of an interest rate hike in October [3][6] Market Reactions - Analysts noted that there was no clear indication from the BOJ's communication suggesting preparation for an October rate hike, with predictions leaning towards a more likely rate increase in December [4][6] - A split in the BOJ's board during the September meeting and calls for a near-term rate hike have led markets to price in over a 60% chance of a rate increase from 0.5% to 0.75% at the upcoming policy meeting on October 29-30 [6] Corporate Resilience - Ueda mentioned that Japan's economy has been managing the impact of U.S. tariffs effectively so far, with many companies benefiting from high profits accumulated previously [6]

Interest Rate Policy - Egypt has the potential for a fourth interest-rate cut this year [1] - A possible fuel price hike may lead to renewed caution regarding interest rate cuts [1] Economic Factors - Slowing inflation provides Egypt with flexibility in its monetary policy [1] - An appreciating currency supports the possibility of further interest rate cuts [1]