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China’s economy showed signs of stabilisation and gradual improvement in November, but authorities warned that external headwinds and persistent domestic imbalances continue to weigh on the outlook, signalling a readiness to step up policy support.
Speaking after the release of November activity data, a spokesperson for the National Bureau of Statistics (NBS) said economic conditions had “stabilised while improving,” reflecting firmer momentum in parts of industrial production and services. However, the official cautioned that changes in the external environment are having a deeper impact, underscoring ongoing pressure from global demand conditions, trade uncertainty and financial market volatility.
The spokesperson highlighted a growing tension between strong domestic supply capacity and weak demand, describing the imbalance as increasingly prominent. While production capacity in some sectors remains ample, subdued household and corporate demand continues to constrain pricing power and profitability. As a result, certain industries and firms are facing mounting operational difficulties.
The comments reinforce the view that China’s recovery remains uneven, with supply-side strength outpacing demand-side momentum. This imbalance has contributed to lingering deflationary pressures and has kept policymakers focused on supporting demand without reigniting financial risks.
In response, the NBS said authorities will step up both counter-cyclical and cross-cyclical policy adjustments, language that typically signals a willingness to deploy additional fiscal, monetary and structural support if conditions warrant. While no specific measures were outlined, the guidance suggests policymakers remain prepared to fine-tune stimulus to stabilise growth and cushion against external shocks.
The remarks are likely to reinforce market expectations for continued targeted support into early 2026, particularly if domestic demand fails to recover more decisively. For now, officials appear intent on maintaining stability while preserving flexibility to respond to a more challenging global backdrop.
This article was written by Eamonn Sheridan at investinglive.com.
The Japanese yen has begun to recover from initial post-data weakness following the release of the Bank of Japan’s December Tankan survey and subsequent comments from a BOJ official, as markets increasingly lean toward the possibility of a policy rate hike later this week.
The Tankan survey showed corporate sentiment holding up better than expected, with large manufacturers’ confidence steady at +15 and smaller firms outperforming forecasts. Capital expenditure plans remained firm, inflation expectations stayed anchored at 2.4% across one-, three- and five-year horizons, and labour shortages persisted, all elements consistent with the BOJ’s narrative that underlying price pressures remain intact.
Follow-up comments from a BOJ official added further colour. Firms cited easing uncertainty around U.S. trade policy, a smaller-than-feared impact from U.S. tariffs, improved cost pass-through and robust demand linked to artificial intelligence and semiconductor investment as factors supporting business conditions. While companies also flagged rising labour costs, worker shortages and weaker consumption due to higher prices, the balance of commentary suggested resilience rather than deterioration in corporate fundamentals.
Taken together, the data and responses appear to strengthen the case for another step toward policy normalisation at the BOJ’s December 18/19 meeting. The combination of stable sentiment, firm capex intentions and anchored inflation expectations supports the view that Japan’s economy can absorb modestly tighter policy, even as profit growth moderates.
In currency markets, the initial reaction was counterintuitive. The yen weakened following the Tankan release, with USD/JPY briefly climbing above 155.95. However, as markets digested the details and the BOJ commentary, the yen began to strengthen, with USD/JPY pulling back below 155.60.
The price action suggests a market still cautious but increasingly sensitive to any signal that the BOJ may move sooner rather than later. With positioning heavily skewed toward yen weakness, even incremental confirmation of a December hike risks triggering further short-covering.
The evolving BoJ rate hike narrative, reinforced by Tankan data and corporate feedback, is shifting expectations. If the BOJ does move this week, it would mark another meaningful step away from ultra-loose policy and could provide further support for the yen, particularly if accompanied by guidance that policy normalisation will continue gradually into 2026.
This article was written by Eamonn Sheridan at investinglive.com.
Reserve Bank of New Zealand Governor Breman said the economic outlook has evolved broadly in line with the Monetary Policy Committee’s expectations, with signs continuing to emerge that growth is recovering.
Breman reiterated that the forward track for the Official Cash Rate (OCR), as published in the November Monetary Policy Statement, still implies a small probability of a further rate cut in the near term. However, she emphasised that if economic conditions unfold as expected, the OCR is likely to remain at its current level of 2.25% for an extended period.
Breman also noted that financial market conditions have tightened since the November policy decision, to a greater degree than implied by the RBNZ’s central OCR projection. She said this tightening would be factored into the bank’s ongoing assessment of monetary conditions and the outlook for growth and inflation.
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The kiwi $ has been marked down on the comments:
This article was written by Eamonn Sheridan at investinglive.com.
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