FXCM
Japanese Small Business Confidence Slips to 10 Year Low, Strengthening Arguments For a BoJ Rate Cut
Wednesday October 29, 10:41 AM
Fundamental Headlines
• GMAC Seeks Access to Bank Bailout Funds – Wall Street Journal
• Recession Fears Settle In as Outlook Dims in Japan – Wall Street Journal
• Stocks rally on talk of Tokyo rate cut – Financial Times
• Porsche to Settle Hedging to Smooth VW Share Price – Bloomberg
• Lufthansa to Limit Expansion as Economy Hurts Traffic – Bloomberg
• GBPUSD – Mortgage approvals in the U.K. inched higher to 33K from 32K in August, while lending rose 2.2B in September as a result of lower borrowing costs. Despite the unexpected improvement, conditions may only get worse as Europe’s second largest economy slips into a recession, and may force the Bank of England to step in once again. Mounting growth fears has already led the BoE to lower the benchmark interest rate by 50bp for the first time since 2001, and the dovish outlook held by the MPC has fueled speculation that the central bank will ease policy further, which would only stoke increased selling pressures for the British pound. Discuss the topic and your trade ideas in the GBP/USD Forum.
• USDJPY – Japanese industrial production rose 1.2% in September after falling at its fastest pace in five years in the previous month. In addition, the Trade Ministry noted that firms are likely to lower production in the coming months despite the minor improvement as demands from the global economy falter. Meanwhile, a separate report showed that vehicle production increased 4.2% after declining 10.9% in August, while confidence among small businesses slipped to its lowest level since 1998 as the index dropped to 37.6 from 40.2 in September. The dour outlook for the world’s second largest economy has raised speculation that the Bank of Japan could be forced to step in as the economy heads for a recession, and has led market participants to raise bets that the BoJ will lower the key interest rate by 25bp to 0.25% this week. For more news and resources, visit the new Japanese Yen Currency Room.
Source:David Song, Currency Analyst strategist@dailyfx.com
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