Rate cut mania appears alive and well at least as far as the ECB and BoJ are concerned, apparently
Bank of Japan Governor Kuroda said to have met with PM Abe this morning, said to have discussed trends in overseas financial markets and the outlook for monetary policy. Suggesting the Bank of Japan could be joining the race to see who wears the yellow jersey below the ZLB. Right now, its neck and neck between the ECB and the BOJ with ten other central sitting back in the peloton getting set to reel in the leaders.
Whispers now suggest the ECB will front-load easing with a 20bp cut + EUR45 bn per month of QE. However, this would trigger a nasty response from the US administration so the FX markets reaction may be the most significant argument to write these rumours off. However, on the other hand, aggressive forward guidance will not do the trick
After getting sideswiped this morning by the tariff headlines, Gold markets are taking comfort on the dovish central bank narrative after the ECB rumours and sings the BoJ are looking go deeper into the sub 0 % abyss
USD/CNH headed lower with USD/CNY down to 7.0900. It's right at the recent fixing level. Expect two-way interest here, but offshore spot may head lower still given the momentum. Especially if the news flow remains trade positive and the market continues to veer to a trade war detente
Adding to the positive sentiment in today's Asia session, China's August new TSF beat consensus on less bad shadow credit and resilient RMB loans. Suggesting a decent credit rebound.