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Japan Capacity Utilization down to -2.3% in August from previous -1.1%

The EUR/USD pair gains ground to near 1.1620 during the Asian trading hours on Wednesday. The US Dollar (USD) softens against the Euro (EUR) after remarks from Federal Reserve (Fed) Chair Jerome Powell bolstered wagers on an interest rate cut this month.

Gold (XAU/USD) touches a fresh all-time peak during the Asian session on Wednesday, with bulls now eyeing a move towards conquering the $4,200 round figure amid the global anxiety.

GBP/USD recovers its losses registered in the previous two successive sessions, trading around 1.3350 during the Asian hours on Wednesday. The pair appreciates as the US Dollar (USD) declines on the increased likelihood of further rate cuts by the Federal Reserve (Fed) in 2025.

The Dow Jones Industrial Average (DJIA) gained ground on Tuesday after a tumultuous late start to the new trading week for US equity markets.

The S&P Global Ratings on Wednesday affirmed New Zealand’s AA+/A-1+ foreign currency and AAA/A-1+ local currency ratings. 

• Japan’s markets unwind Abenomics “2” trades as Komeito exit fuels political uncertainty
• ConocoPhillips warn oil market sentiment may be too bearish as physical supply stays tight
• S&P affirm New Zealand ratings
• Recap: China deflation eases but persists, longest price decline streak since 1970s reform
• China sees Trump’s stock market fixation as leverage in trade standoff (WSJ)
• China September CPI -0.3% y/y (vs. expected -0.2%)
• The PBOC cracking 7.1 in its USD/CNY fix has sent the USD lower across the board
• PBOC sets USD/ CNY mid-point today at 7.0995 !!! (vs. estimate at 7.1281)
• JPMorgan’s Dimon says owning gold makes sense in today’s market, could go to US$10,000
• RBNZ’s Conway says a bit ‘nerve wracking’ with inflation at the top of its target band
• EUR4.13bn strikes in EUR/USD circa 1.1600. A likely magnet for EUR/USD in Asia.
• Standard Chartered sees euro slipping to 1.13 by mid-2026: rate cuts, growth headwinds
• PBOC is expected to set the USD/CNY reference rate at 7.1281 – Reuters estimate
• Australian September Leading Index “nudges back up to just over trend”
• More from RBA’s Hunter: Policy being set on a 1 to 2 year horizon, its foreward looking
• RBNZ’s Conway: No new monetary policy tools planned, OCR remains main policy instrument
• RBA’s Hunter: Inflation is likely to be stronger than forecast in Q3
• RBNZ’s Conway: Rates of 2.5% at lower end of neutral range, but we are feeling our way
• ICYMI: Deutsche Bank upgrade Europe vs US, sees 12–16% upside. Stimulus & earnings rebound
• RBNZ’s Conway doesn’t expect to use additional monetary policy tools again any time soon
• Global investors crowd into gold as bullish sentiment hits eight-month high — BofA survey
• Economists want Waller as new Fed Chair. But, sry Chris, Trump is just not that into you.
• US moves to seize $12 billion in bitcoin tied to Cambodia scam kingpin Chen Zhi
• Reserve Bank of New Zealand’s Conway says will close the gap between Dec, Feb meetings
• investingLive Americas FX wrap: Trump saps the momentum with a China tweet
• Powell remarks confirm October 28 – 29 rate-cut expectations, says JPMorgan
• China hits first US-linked ship with $1.7m “special port fee” in trade retaliation
• Japan to ban cryptocurrency insider trading with new rules – Nikkei reporting
• US stocks close mixed. Dow rises. Nasdaq falls
• More from Fed’s Collins: Inflation continues to be top of mind

It was a session dominated by central bank signals across the region, with New Zealand, Australia, Japan and China all in focus. The net effect was a stronger yen, firmer major FX against the dollar, and growing evidence that policy paths across the region are diverging.

New Zealand:

Reserve Bank of New Zealand Chief Economist Paul Conway said the official cash rate (2.5%) sits at the lower end of its neutral range but reaffirmed that policymakers remain open to further easing if required. The RBNZ has cut by 300bps since August 2024, including last week’s surprise 50bp move, amid worries over the economy’s fragile state. His remarks reinforced the RBNZ’s willingness to act if growth fails to stabilise.

Australia:

Reserve Bank of Australia Assistant Governor (Economic) Sarah Hunter said recent data showed Q3 inflation is a touch print hotter than forecast, pointing to a still-tight economy even as job growth slows. Speaking at a Citi event, she flagged sluggish productivity as a structural constraint that lowers Australia’s growth and wage “speed limits.” Her comments tempered expectations of near-term rate cuts, underscoring the RBA’s cautious approach as inflation risks remain sticky.

China:

The People’s Bank of China set the USD/CNY fixing below 7.10, a stronger-than-expected signal that triggered broad, if restrained, USD selling across G10 and Asia FX. EUR, GBP, and AUD all moved higher on the yuan’s strength.

Separately, China’s latest inflation data showed deflation lingering even as it eased marginally. CPI fell 0.3% y/y in September (vs –0.2% expected), while PPI declined 2.3%, marking a third consecutive year of factory-gate deflation. The only bright spot was core CPI, up 1.0% y/y, its highest in 19 months, suggesting some stabilisation in consumer demand.

Japan:

The yen extended its rebound as political uncertainty deepened. The market’s assumption of a Takaichi-led LDP government—and with it, a continuation of Abenomics—has weakened after Komeito’s exit from the ruling coalition. Jiji reported a parliamentary deadlock over the October 21 vote to select Japan’s next prime minister, keeping political risk elevated.

USD/JPY dropped to 151.00 and EUR/JPY to 175.50, as traders unwound weak-yen and long-equity positions.

The Nikkei 225, which had reached a record 48,597 earlier this month, has since corrected more than 2,000 points. It rose today.

Gold rose. Again.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) +1.13%
• Hong
  Kong (Hang Seng) +1.2%
• Shanghai
  Composite +0.1%
• Australia
  (S&P/ASX 200) +0.74%

This article was written by Eamonn Sheridan at investinglive.com.