Brent And Currency Market Moves
Brent rose above $107 a barrel on Monday in thin markets, with Japan closed for Health and Sports Day and the US Treasury market shut for Columbus Day. USD/JPY ended near 158.60, its highest close since 24 September, after dipping to around 158.00 when Brent briefly fell below $103 at the weekly open following President Trump’s claim of a Russia-Ukraine energy ceasefire. Oil then bounced back towards $107 as Russia continued striking Ukraine’s energy infrastructure and Iran’s Revolutionary Guards said a third supertanker had been hit in the Strait of Hormuz. With cash bonds closed, the US 10-year yield held at 5.24% and Japan’s 10-year near 3.0%, while the policy-rate gap left the Fed at 3.75%-4.00% versus the BoJ at 1.25%, implying more than 2.5 percentage points a year for borrowing yen to hold dollars.
Speculators, Bank Of Japan, And Market Outlook
Positioning pointed the other way: speculators were net long yen by 62.3K futures contracts as of 6 October, equivalent to about ¥779 billion, after adding 6.9K in a week; earlier, the Finance Ministry spent ¥15.4 trillion from 30 July to late August, with buying starting near 164.00. A BoJ board member who opposed the 18 September move to 1.25% has since backed staged increases, even as household spending fell for a ninth consecutive month in August and reporting flagged a 30 October pause with a December hike. Focus now shifts to US CPI on Wednesday at 12:30 GMT, forecast at 0.6% MoM and 3.7% YoY, or 0.2% and 2.5% excluding food and energy; US PPI is seen at 5.4% YoY, and market pricing puts December Fed hike odds above 80% versus under 20% for 28 October.
