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

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.