Markets Update

From the FXWW Chatroom: Asia equity markets failed to take the impetus from the positive lead from Wall St., with the region mostly lower amid weakness across commodities. Nikkei 225 (-1.5%) was the laggard with commodity-related sectors suffering after oil prices fell nearly 3% amid doubts regarding an output freeze deal, while gold prices also dropped over USD 10/oz in the prior session after US Consumer Confidence rose to its highest since August 2007. This also weighed on commodity names in the ASX 200 (-0.1%), although losses were stemmed by strength in utilities, led by AGL Energy. Shanghai Composite (-0.3%) and Hang Seng (-0.7%) conformed to the lacklustre tone after the WTO forecasted world trade to grow at its slowest pace since the GFC, with Hong Kong markets the underperformer on amid a lacklustre debut from Postal Savings Bank of China. 10yr JGBs were higher amid risk averse sentiment in Japan and the BoJ also in the market for over JPY 1.1tln of government debt, while Japanese yields remained pressured in which the 2yr yield declined to its lowest in around 2 months. Money market rates in China increased with the 7-day repo rate at its highest in a year of 2.58%, ahead of next week’s closure for National Day holiday.  PBOC set USD/CNY midpoint at 6.6681 (Prev. 6.6646).  PBOC injected CNY 140bln 14-day reverse repos and CNY 10bln in 28-day reverse repos. Japan PM adviser Hamada said JPY strength is damaging confidence in economy and could hurt BoJ. Hamada added further BoJ easing may not be fully effective unless MoF addresses speculative forces in FX markets which block regular transmission of monetary policy and that MoF should intervene in FX to stem sudden moves such as 5%-6% per day.

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