Morning Bid: Xi’s electric | Reuters

October 24 (Reuters) – A look at Jamie McGeever’s day ahead of Asian markets

Chinese politics, Japanese politics.

Notable developments on both fronts over the past 48 hours will be the subject of Asian trading floors on Monday – the former with longer-term economic ramifications, and the latter could potentially lead to more immediate market fireworks.

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In Beijing, China’s Xi Jinping has secured a historic third term of leadership and is the country’s most powerful ruler since Mao Zedong. His grip on the Communist Party – and the country – seems rock solid.

This was offered for public consumption on Saturday when former President Hu Jintao was unexpectedly escorted from the closing ceremony of the party congress. Video footage showed Hu, who was sitting next to Xi, looking sad and confused.

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Xi’s cabinet reshuffle could also lead to the resignation of central bank chief Yi Gang and his replacement by former deputy governor Yin Yong, according to sources. “The reformist camp is almost over,” said one.

Meanwhile, Japan intervened in the FX market on Friday after the yen plunged to a new 32-year low, close to $152.00 per dollar. No matter how many dollars Tokyo sold, it paid off – the dollar dropped more than 7 yen to its low of 144.50 before the day ended around 147.50.

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But it remains to be seen whether this will turn the tide of selling the yen, or whether the FX market will recharge and go again. As long as the monetary policy gap between the US and Japan persists, traders will feel that there is still strength in long dollar/short yen trading despite the specter of Japanese intervention.

While the intervention was a “success,” the dollar is stronger today at around 147.50 yen than when Tokyo last intervened, selling nearly $20 billion on Sept. 22. Then the dollar was just below 147.00 yen.

History shows that this is not over yet.

Key developments that could give the markets more direction on Monday:

PMIs Australia (October)

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Japanese PMIs (October)

US, European PMIs (October)

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Reporting by Jamie McGeever in Orlando, Florida; Editing by Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London and now back in the US. Focus on economics, central banks, policymakers and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie


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