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All Eyes On Bank Of Japan

Evergrande Shares Tumble By 25%

Shares of embattled developer China Evergrande Group (3333.HK) plunged by 25% today after police detained some staff at its wealth management unit, suggesting a new investigation that could add to the property company’s woes.

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Today’s News

The Bank of Japan’s (BOJ) policy meeting on Friday is the highlight of the week in Asia, with speculation rising that policymakers may be much closer to moving away from ultra-loose policy and negative interest rates than previously thought.

Rate decisions and guidance from Taiwan, the Philippines and Indonesia on Thursday will also be closely scrutinized, while the latest inflation figures from Japan, Malaysia and Hong Kong are on tap this week too.

Wall Street’s gloomy end to last week has seen the three main indexes fall between 0.83% and 1.56% on Friday. This will cast a shadow over the Asia open today, even though Asian markets ended the week on a far more positive note. Meanwhile, the MSCI Asia ex-Japan Index rose on Friday, lifted by surprisingly strong Chinese retail sales and industrial production figures, ensuring a decent 1.2% rise on the week.

The euro has weakened for the last nine weeks, its longest losing streak ever. The 5% decline over that period is modest relative to other multi-week spells of depreciation, but nine weeks is still record-breaking. A period of consolidation and reversal is surely imminent.

The flip side of that run, which has more far-reaching implications and affects Asia more is the dollar has strengthened nine weeks in a row, its longest, best run since 2014.

Other related news include:

Yen Under A Microscope Prior To Meeting

The U.S. dollar and most major currencies were flatlining in early trades today, barring a blip in sterling, as a Japanese holiday and a bunch of upcoming central bank meetings sucked the air out of markets.

Source: The Japan Times

The BOJ’s policy meeting on Friday is the highlight of the week in Asia, after Governor Kazuo Ueda stoked speculation of an imminent move away from ultra-loose policy. In a week packed with central bank meetings, decisions are also due from the U.S. Federal Reserve on Wednesday and Bank of England on Thursday.

An Unlikely Rate Raise In November

The Federal Reserve is unlikely to raise interest rates at its Oct. 31-Nov. 1 meeting, Goldman Sachs strategists wrote on Saturday, while also forecasting the U.S. central bank would lift its economic growth projections when policymakers gather next week.

Source: Investopedia

“We think that further labor market rebalancing, better news on inflation, and the likely upcoming Q4 growth pothole will convince more participants that the FOMC (Federal Open Market Committee) can forgo a final hike this year, as we think it ultimately will,” the investment bank’s strategists wrote in a report.

A Slow Start For The Asian Markets

Asian shares started cautiously today in a week packed with central bank meetings that include the Federal Reserve and the Bank of Japan, which will be closely scrutinized for the global interest rate outlook.

Source: ABC News

Both S&P 500 futures and Nasdaq futures rose by 0.2% in early Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped by 0.1% after gaining 1.2% last week. Meanwhile, Japan’s Nikkei (.N225) is closed for a holiday.

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