ForexLive Asia-Pacific FX news wrap: Large swings continue for GBP

• GBP/USD loses more than half a big figure in minutes
• Japan’s Matsuno wants to complete an extra budget, economic package swiftly
• China Caixin / Markit Manufacturing PMI for September 48.1 (expected 49.5, prior 49.5)
• Australia to end mandatory COVID-19 isolation from October 14
• Westpac have raised their forecast for the RBNZ terminal rate to 4.5% (from 4%)
• Australian Private Sector Credit for August +0.8% m/m (expected 0.6%, prior 0.7%)
• China official Manufacturing PMI 50.1 (expected 49.6)
• PBOC sets USD/ CNY reference rate for today at 7.0998 (vs. estimate at 7.0951)
• RBA meeting Tuesday October 4, 50bp cash rate hike widely expected, then more by year end
• Japan data – August preliminary industrial production 2.7% m/m (expected +0.2%)
• Japan retail sales for August 4.1% y/y (expected 2.8%)
• Japan August unemployment rate 2.5% (expected 2.5%, prior 2.6%)
• More from Fed’s Daly: Fed rate path projection of 4%-4.5% by year end, 4.5%-5% in 2023
• ICYMI – Cost of an average UK mortgage could rise 70% by March
• Morgan Stanley likes buying dips in USD/JPY, see 146 – 147 ahead due to higher Fed rates
• ECB speakers on the schedule for Friday, 30 September 2022, Elderson, Schnabel
• UK financial media report government departments are being instructed to prepare for cuts
• New Zealand data – August building permits -1.6% m/m (prior +5.0%)
• Fed’s Daly says we have gotten rates to neutral
• New Zealand consumer confidence data is still languishing at a deeply pessimist value
• Fed’s Daly says a deep recession is not warranted or necessary
• IIF forecasts China’s growth at just 2.6% this year
• Trade ideas thread – Friday, 30 September 2022
• UK media report that UK PM Truss to hold emergency talks with OBR on Friday
• Forexlive Americas FX news wrap: Cable soars, stocks sink, flows dominate
• US major indices erase the gains from yesterday. Close sharply lower.

GBP
had rallied hard on Thursday and the initial move during Asia was
continuation, taking cable to highs circa 1.1200. The swings in GBP
were large, after 1.12 was a 70-odd point pullback before another
retest of that big figure. As I post GBP/USD has dropped back under
1.1100 in mere minutes. Its straddling 1.11 as I post and showing no
signs of abating in volatility heading into Friday Europe/UK/US time.

USD/JPY
was
a mover also, not to the same extent. US highs circa 144.80 held
again here during the timezone after the pair rose from around
144.30. We
saw improving data from Japan today (see bullets above), and promises
of further fiscal support for the economy.

Speaking
of data, the focus was on Chinese PMIs for September:

• the
  official China
  manufacturing Pmi
  inched barley into expansion, while the alternative survey private
  Caixin manufacturing PMI remaind in contraction
• the
  official services PMI fell to a 4 month low, still in expansion –
  construction activity gave the PMI a lift from the recent
  infrastructure
  policies

Central
bank-speak was from Mary Daly, head of the San Francisco Federal
Reserve branch. Daly said a deep recession was not needed nor
warranted. That qualifier, ‘deep’, is a bit of a worry. Fed
thinking looks to me like they are seeing a recession as locked in.

3-minute candles for cable: