Yen Slips as China Sentiment Improves, Political Pressure Builds on BoJ – Action Forex

Yen was under pressure across the board in Asian session today as improved sentiment toward China and dovish domestic signals combined to sap demand for the safe-haven currency. Traders interpreted the latest Chinese inflation report and a surprise U.S. trade gesture as signs of stabilizing conditions, prompting flows back into risk assets.

China’s October CPI returned to positive territory, beating forecasts and ending two months of declines. While deflation concerns have not fully dissipated, the rebound raised confidence that Beijing’s supply-side policies are gaining traction in reducing industrial overcapacity. The focus now shifts to whether authorities will complement those efforts with stronger demand-side measures.

Risk appetite was further buoyed after Washington announced it would suspend for one year any action under its Section 301 investigations into China’s maritime, logistics, and shipbuilding sectors. The pause marks another tangible sign of near-term trade de-escalation and offered additional relief for regional assets already supported by improving Chinese data.

Sentiment toward the Japanese currency was further undermined by comments from Takuji Aida, an influential economist on Prime Minister Sanae Takaichi’s flagship policy panel. Aida told the Nikkei that the BoJ should avoid raising rates in December and wait at least until January to safeguard a fragile recovery.

He argued that the government should cushion households from high living costs with large-scale spending until real income growth turns positive, suggesting monetary and fiscal policies must remain complementary. His views carry weight given his proximity to Takaichi, and they reinforced speculation that policymakers may tolerate a slower path to normalization.

By midday, Yen was the day’s weakest performer, followed by Swiss Franc and Sterling, while Aussie, Kiwi, and Loonie led gains. Dollar and Euro traded mid-pack, reflecting a market tilt toward risk-on positioning.

In Asia, at the time of writing, Nikkei is up 1.29%. Hong Kong HSI is up 1.30%. China Shanghai SSE is up 0.19%. Singapore Strait Times is down -0.42%. Japan 10-year JGB yield is up 0.021 at 1.700.

BoJ summary show split narrows as members debate near term rate hike

The BoJ’s Summary of Opinions from October 29–30 meeting revealed a growing consensus among policymakers that conditions are nearly in place for a rate hike. Eight opinions either called for raising interest rates soon or outlined conditions under which borrowing costs should rise in the near term—marking the clearest sign yet that the BoJ is preparing for its next move.

Several members emphasized that while immediate action may not be necessary, the Bank “should not miss the timing to raise the policy interest rate.” Others noted that a hike would likely follow if global economic conditions remained stable and corporate wage-setting momentum was sustained. One view stated that “conditions for taking a further step toward normalizing the policy rate have almost been met,” but stressed the need to confirm that underlying inflation is firmly entrenched.

Still, some members urged caution. One participant argued that the BoJ should take “a little more time” to assess the impact of U.S. tariffs and Japan’s new fiscal direction before tightening policy further. The minutes reinforce market expectations that the Bank is leaning toward a rate increase either in December or early 2026, contingent on wage data and external stability.

China CPI turns positive to 0.2% yoy in October, core gauge hits 19-month high

China’s inflation turned positive in October, signaling tentative signs of price stabilization e. Headline CPI rose 0.2% yoy, beating expectations of flat growth and rebounding from September’s -0.3%. The return to positive territory, driven largely by firmer service prices, suggests domestic demand may be gradually recovering amid ongoing policy support.

The breakdown showed goods prices still fell -0.2% yoy, while service prices rose 0.8%. Food prices remained weak, down -2.9%. But core CPI—excluding food and energy—accelerated from 1.0% to 1.2%, the highest since March 2024.

Producer prices also edged higher, with PPI contracting -2.1% yoy, less than September’s -2.3% and above forecasts of -2.3% yoy. It marked the 37th straight month of decline but reflected narrower price falls in key industrial sectors.

BoC minutes, UK GDP and Australia jobs to guide markets through quiet week

After weeks dominated by macro turbulence and shifting sentiment, the coming days look comparatively calm. Still, the schedule contains enough central-bank and growth data to keep traders alert for any signs of shifting policy momentum heading into December.

In Canada, the BoC’s Summary of Deliberations will provide color on October’s rate cut and the Governing Council’s conviction that policy is now “about the right level.” That phrase—repeated in Governor Macklem’s parliamentary testimony—signals a shift to an extended holding phase as previous easing filters through an economy adjusting to U.S. tariffs.

The underlying question is how confident policymakers are that they have struck the right balance between supporting growth and containing residual inflation pressures. Markets will watch for any sign that the Bank might reassess if growth deteriorates further into winter.

The UK will meanwhile deliver a busy slate of releases, including Q3 GDP and monthly labor data. Economists expect a modest 0.2% quarterly expansion, reinforcing the case for a BoE rate cut in December as policymakers assess the economy’s fragile growth and softening wage pressures. The easing track remains on course, with the Autumn Budget seen as the final piece before confirmation.

Australia’s October jobs data will also test market expectations. The RBA is seen keeping rates steady until at least February, after reviewing Q4 CPI. However, if employment shows material weakness, the timeline for rate cuts could shift earlier.

Elsewhere, Eurozone Sentix and German ZEW sentiment readings, along with China’s data on industrial output, retail sales, and fixed-asset investment, will also be closely watched.

Here are some highlights for the week:

• Monday: BoJ summary of opinions; Eurozone Sentix investor confidence.
• Tuesday: Australia Westpac consumer sentiment; NAB business confidence; UK employment; Germany ZEW economic sentiment.
• Wednesday: BoC summary of deliberations.
• Thursday: Japan PPI; Australia employment; UK GDP; Swiss CPI; Eurozone industrial production.
• Friday: New Zealand BNZ manufacturing; China industrial production, retail sales, fixed asset investment; Eurozone GDP revision trade balance; Canada manufacturing sales, wholesale sales.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 201.03; (P) 201.56; (R1) 202.47; More…

GBP/JPY’s rebound form 199.04 extended higher today but it stays within near term falling channel and below 204.22 resistance. Intraday bas remains neutral first. On the upside, break of 204.22 should confirm that fall from 205.30 has completed as correction, and larger rise from 184.53 is ready to resume through 205.30. On the downside, though, break of 200.63 minor support will extend the correction through 199.04 to 197.47 cluster (38.2% retracement of 184.35 to 205.30 at 197.29).

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 197.47 support will dampen this view and extend the corrective pattern with another fall.