USD/JPY edges lower, China cuts lending rates

[PocketOption]

USD/JPY edges lower, China cuts lending rates

The yen is slightly lower on Monday. In the European session, USD/JPY is trading at 149.96, up 0.30%.

China lowers key lending rates by 25 basis points.

China cuts key lending rates

China lowered its key lending rates by 25 basis points on Monday. This brings the one-year loan prime rate (LPR) down to 3.1% and the 5-year LPR down to 3.6%. The move was expected and follows lending cuts in September, as China's central bank is increasing stimulus measures in order to boost flagging economic growth.

On Friday, China’s third-quarter GDP which showed a gain of 4.6% y/y, above the market estimate of 4.5% but below the 4.7% clip in Q2. This was the slowest annual growth rate since Q1 2023. China's economy is struggling due to a variety of factors, including a property crisis, weak domestic demand and deflation. Imports have fallen off and that is a major concern for Japan, as China is Japan's largest export market.

China's GDP target is around 5% and September's retail sales and industrial production provided positive news, as both accelerated in September and were stronger than expected. Retail sales climbed 3.2% y/y, up from 2.1% in August and above the market estimate of 2.5%. Industrial production rose 5.4%, well above the August gain of 4.5% and blowing past the market estimate of 4.6%.

The Bank of Japan holds its two-day meeting which concludes on Oct. 31, just four days after a snap general election. The BoJ is expected to maintain policy settings at the meeting. New Prime Minister Shigeru Ishiba had been considered a monetary hawk but since becoming prime minister has said he would leave monetary policy to the BoJ.

USD/JPY Technical

• USD/JPY has pushed above resistance at 149.74 and is putting pressure on resistance at 150.10


• 148.83 and 148.28 are providing support

Source: USD/JPY edges lower, China cuts lending rates