Asia session wrap – RBA signals, soft jobs shock, yen steadies.

It was an eventful session for Australia-watchers, with a series of central bank comments followed by a surprisingly weak labour report that sharply shifted rate cut expectations.

Australia:

Reserve Bank of Australia Governor Michele Bullock struck a measured tone late in the U.S. day, suggesting little urgency for another rate cut at the Bank’s upcoming November 3–4 meeting. She noted improving consumption trends and did not sound alarmed about the slight cooling in labour market conditions.

Soon after, Assistant Governor Christopher Kent said financial conditions are beginning to loosen following this year’s three rate cuts, with credit now flowing more easily to households and businesses. He acknowledged that while policy is less restrictive, the outlook remains uncertain and the RBA will continue reassessing its stance as new data arrive.

That data came quickly. And it was a jolt.

September’s employment report showed the jobless rate jumping to 4.5%, the highest since late 2021 and above the 4.3% expected, while net employment rose just 14,900 versus forecasts of +17,000. The rise in participation drove the unemployment rate above the RBA’s projected year-end peak, marking a clear loosening in labour conditions.

Markets reacted swiftly: a November rate cut is now priced above 75%, compared with roughly 30% before the release. The Australian dollar slumped around 0.4% to US$0.6485 or so, three-year bond futures rallied, and the ASX 200 touched record highs on renewed easing bets.

Traders caution that the final call will depend on Q3 CPI data due October 29, but inflation would need to reaccelerate meaningfully to prevent a November move. The labour report effectively undercuts recent RBA messaging that the easing cycle was nearly done.

Japan:

Finance Minister Shunichi Kato reiterated his familiar warnings against excessive currency volatility, saying Tokyo will “thoroughly monitor” FX markets in coordination with U.S. Treasury Secretary Scott Bessent, with whom he reaffirmed commitments to exchange-rate stability. Bessent said separately that the yen should settle at an appropriate level if the Bank of Japan maintains sound policy.

The comments, coupled with hawkish remarks from BoJ Board Member Toyoaki Tamura, who again called for rate hikes amid rising inflation risks, supported the yen. USD/JPY fell to around 150.50.

China:

China headlines were dominated by state-backed investment themes. Shenzhen launched a 5 billion yuan semiconductor fund to target weak points in the domestic chip supply chain, including computing power, storage, optoelectronics, sensors, and advanced manufacturing equipment.

Separately, analysts expect central and state-owned enterprises to boost investment in Q4 as cash flow improves. SOE revenues rose 0.2% year-to-date through August — the first annual growth this year — while China State Grid alone invested over 420 billion yuan in fixed assets through September, with full-year spending expected to top 650 billion yuan for the first time.

FX and commodities:

The U.S. dollar weakened broadly, with the yen, euro, sterling, kiwi, loonie, and franc all firmer. The Aussie underperformed following the weak jobs data. Gold tested back above US$4,240, benefiting from the softer greenback and rising expectations of policy easing.

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