Market News

• BOJ needs a different response from conventional semi-annual rate hike pace
• Need to consider a broad range of options, not just 0.25% rate hike each time
• Neutral rates could diverse from levels calculated based on conventional analysis
• A rate hike should be assessed at every meeting, so consecutive rate hikes could be a possibility
• Will not comment on Bessent's remarks regarding BOJ policy

It's certainly interesting to see how the communication tone has shifted among Japanese policymakers.

Before all this, it was still the usual careful and more curated approach in trying to leave all options on the table. It was a case of always saying that "we cannot confirm nor deny" whether we will raise interest rates.

Now after the joint intervention…

The past week hasn't been a kind one for gold as what looked to be a potential upside break at the end of August turned into anything but that instead. For one, renewed tensions between the US and Iran isn't helping. But adding to that, the more hawkish signal from Fed chair Warsh in Jackson Hole also helped to put a dent on the precious metal as the dollar recovered.

And against the backdrop of rising bond yields across the globe, gold is certainly feeling the heat again this week.

So, what's next?

The latest fall this week now sees price action fall back below the 100-day moving average (red line), seen at $4,360. Adding insult to injury, the drop also now breaks below the 50.0 Fib retracement level of the swing higher from July to August…

• The decision we’re going to make next week will not be a surprise to anybody
• Policy is not restrictive
• It would only be thereabouts roughly speaking, once we get above 2.75%
• ECB needs to be ready to move there if "a significant shift in an upward direction, in terms of inflation risks" materialises
• If inflation starts moving in the wrong direction, then we’re going to have to move in that direction
• For now, it isn't clear that a further rate hike will be needed after the one next week
• ECB should continue to stick with meeting-by-meeting approach
• Inflation expectations are in a good place, no evidence of second-round effects in terms of wages

The full transcript can be found here (may be gated).

It's definitely no surprise with markets already…

• RBNZ chief says rate settings still accommodative despite hikes
• Asian stocks slide as Iran conflict fuels oil and bond yield worries
• Australia Q2 GDP beats at 0.4%, keeps September rate hike in play
• RBNZ lifts OCR to 2.75%, says gradual tightening reduces risk of bigger hikes later
• BOJ hawk Takata says nimble rate hikes needed as inflation risks build
• Australian Q2 GDP 0.4% q/q (expected 0.3%, prior 0.3%)
• Trump says he is in no rush for Iran talks, points to Hormuz control
• PBOC sets USD/ CNY mid-point today at 6.7829 (vs. estimate at 6.7238)
• US strikes Iranian tankers for first time under new deterrence policy
• Ueda signals more BOJ hikes ahead but flags cumulative rate risks
• The information gap: what retail traders don't see, and why that might be…

Breman's comments suggest the RBNZ is not signalling any material shift from its previous guidance, with the OCR track described as very similar to the bank's May projections, likely limiting any sharp repricing of future hike expectations following Wednesday's move. Her emphasis that policy remains accommodative even after moving the OCR toward neutral, combined with a stated need to take time assessing the impact of hikes already delivered, points to a data dependent approach rather than a preset tightening path. The acknowledgment that a further OCR increase is likely, paired with explicit uncertainty over timing, keeps optionality firmly with the committee and should temper any aggressive repricing in either direction. Her direct…

The scale of the selloff across both Japan and South Korea points to a market treating the latest US Iran escalation as a genuine regime shift rather than a passing headline, with the move showing up simultaneously in equities, oil and sovereign bond yields. Analysts are attributing the pressure on growth and tech names specifically to the jump in bond yields, arguing that this particular yield rise reflects fiscal risk concerns rather than the kind of yield increase that typically accompanies healthy economic strength. In Japan, the added layer of rising BOJ rate hike expectations is compounding the pressure on JGB yields, creating a double headwind for equities from both global risk aversion and domestic policy tightening bets. The…

The stronger than expected GDP print has pushed market pricing for a September RBA hike to 57 percent, up from 48 percent beforehand, while a November move remains more than fully priced. AUD/USD ticked higher on the release, trading above 0.7150, as the beat on both quarterly and annual growth reinforced the case for further tightening. With annual growth at 2.1 percent still running above the RBA's estimated 2 percent non-inflationary speed limit, and underlying trimmed mean inflation stuck at 3.6 percent, the data leaves the central bank with limited room to pause. The composition of growth, EV driven consumption and vehicle imports offsetting weaker business investment and softer services trade, points to a domestic demand base still…

The RBNZ's decision to hike by 25 basis points despite inflation already running at 4.1 percent, well above the top of its 1 to 3 percent target band, signals a central bank prioritising a gradual, telegraphed path over a more aggressive response to the current oil price shock. The explicit acknowledgment that four of seven committee members see upside risks to inflation, against two who view risks as balanced, suggests further hikes remain firmly on the table if energy and petrochemical prices stay elevated. The RBNZ's framing that gradual removal of stimulus now reduces the risk of a larger, faster increase later is a clear attempt to manage market expectations around the pace of tightening rather than its ultimate direction. With…

Reserve Bank of New Zealand raise rates to 2.75% from 2.5% as was widely expected. 

I'll have more to come on this separately, details and implications. Added, here is more:

• RBNZ lifts OCR to 2.75%, says gradual tightening reduces risk of bigger hikes later

Background previews can be found here:

• Economic and event calendar in Asia Wednesday, September 2, 2026 - RBZN rate hike expected

Comments from Takata, the BOJ's most consistent hawkish dissenter and a repeat vote for faster tightening at recent meetings, add to the picture of an internally divided board leaning toward further hikes even as Governor Ueda strikes a more measured public tone. His call for the BOJ to demonstrate determination against upward price deviations, rather than simply encouraging inflation to rise, signals a desire to shift the bank's communication stance more assertively than the current majority view. His warning that rising overseas interest rates could push Japan's own neutral rate above what markets currently expect is a notable escalation in tone, since it implies the eventual terminal rate for this hiking cycle may be underpriced.…

Australian Q2 GDP 0.4% q/q for a beat

• expected 0.3%, prior 0.3%

2.1% y/y, beat

• expected 1.8%, prior 2.5%

Just the numbers this post. I'll have more to come on this separately, details and implications. 

In brief AUD should get a supportive blip, at the margin.