News

• Prior +0.6%; revised to +0.5%
• Retail sales +0.7% vs +0.6% y/y expected
• Prior +1.1%; revised to +0.8%
• Retail sales ex autos, fuel +0.8% vs +0.7% m/m expected
• Prior +0.5%; revised to +0.4%
• Retail sales ex autos, fuel +1.2% vs +1.0% y/y expected
• Prior +1.3%; revised to +1.0%

The readings are a slight beat on estimates but do keep in mind that it comes amid a negative revision to the July numbers. In the three months to August, retail sales volumes were still down 0.1% but at least less markedly compared to the 0.6% fall in the three months to July. But when compared to the pre-pandemic i.e. February 2020 levels, retail sales volumes are down 2.1%.

On the month itself, there were modest increases in sales for all categories i.e. food stores, department stores, non-food stores, textile and clothing. That is all partially offset by a fall in automotive fuel sales.

Overall, it’s just a modest bump on the month but the big picture remains a struggle for the UK consumer as higher prices are still largely playing a part in pinching households.

This article was written by Justin Low at investinglive.com.

There are just a couple to take note of on the day, as highlighted in bold below.

They are both for EUR/USD at the 1.1750 and 1.1800 levels. The current price action is being sandwiched by the expiries, so we could see that define the range for European trading as markets continue to digest the post-Fed mood. That especially as the dollar has recovered modestly amid a jump up in bond yields overnight, which have calmed down since.

For more information on how to use this data, you may refer to this post here.

Head on over to investingLive (formerly ForexLive) to get in on the know!

This article was written by Justin Low at investinglive.com.

The BoJ kept rates steady at 0.50% in September, but the 7–2 vote revealed a growing hawkish bias. Naoki Tamura and Hajime Takata broke ranks to support a rate increase, citing upside risks to inflation and progress toward achieving the 2% price stability target. Takata said that Japan has more or less achieved its inflation […]

The post BoJ holds with two members calling for hike, starts selling ETFs and J-REITs appeared first on Action Forex.

2-year JGB yields have now jumped up to 0.91% – its highest since 2008. Meanwhile, 5-year JGB yields have also shot higher to 1.20% – also its highest since 2008. This follows from the BOJ decision earlier, in which we saw policymakers Takata and Tamura dissented in favour of a 25 bps rate hike.

The overall decision was still a 7-2 majority in holding rates unchanged. However, is the dial starting to shift within the BOJ for their upcoming decisions?

Before today, a rate hike before the end of the year seems improbable for the BOJ. That especially as the US-Japan trade deal put a roadblock in front of the central bank’s plans. The tariffs situation and the relative uncertainty is still one that the BOJ had previously reaffirmed in warranting a more cautious approach.

It’s very rare to see BOJ policymakers break ranks like they did today. So, the question now is whether there is stronger feelings among the board in actually leaning towards a rate hike before next year? And if so, is today’s push by Takata and Tamura enough to persuade others to join them in October or December?

Right now, traders are pricing ~47% odds of a 25 bps rate hike for October. And by December, there is roughly ~18 bps of rate hikes baked in. All of a sudden, the upcoming meetings look to be “live” ones. And that is keeping the yen firmer in the aftermath of the decision earlier.

We’ll now have to wait on BOJ governor Ueda’s press conference later to provide more clarity into their line of thinking. That will help to either shore up market odds and/or dissuade any overeager pricing.

This article was written by Justin Low at investinglive.com.

There are a couple of interesting things with regards to the BOJ decision today. The first that stands out is of course the vote on interest rates. Takata and Tamura dissented in favour of opting for a 25 bps rate hike, and that led to the 7-2 majority in keeping rates on hold. That’s a standout that is helping to push the yen higher, with it having a more hawkish twist.

However, the other thing to note as well is that the BOJ is now set to unload its ETF holdings. That being said, do keep in mind that there’s a bit of a caveat to how the central bank is set to sell its ETF holdings. For some context, the BOJ holds about ¥37 trillion in ETFs. And the decision today notes that they are to sell around ¥330 billion of ETFs annually. Yes, you read that right.

In simpler terms, it would take the BOJ roughly 112 years to unwind all of its ETF holdings going by the current pace. So, that puts into context how miniscule and minimal their “selling” really is. They did say that they will adjust the pace of sales in the future but I don’t think they will plan to shake up the market all too much. *coughs* Sorry, the BOJ is already the market.

Nonetheless, it’s still enough to provoke a reaction in domestic assets. Japanese stocks are selling off and that’s also feeding in part to further yen strength, besides the monetary policy discourse above.

USD/JPY has dipped back to around 147.27 and is now contesting its 200-hour moving average (blue line) of 147.25. For buyers, keeping above that will still see them hold near-term control after a solid rebound following the FOMC meeting this week.

In the bigger picture though, USD/JPY still isn’t really going anywhere over the past few weeks.

The pair is still caught rangebound in between its 100 (red line) and 200-day (blue line) moving averages and there needs to be a firm break on either side for the next trending leg to be apparent.

This article was written by Justin Low at investinglive.com.

The post with the decision is here:

• Bank of Japan leaves main policy rate unchanged at 0.5%, as widely expected

The two dissents judged inflation was such that raising rates would be appropriate.

Note also, the Bank is about to begin selling its holdings of ETFs and J-REITS.

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