• China’s ‘very strong’ rare earths leverage set to endure, says Goldman Sachs
• China on slower GDP: tariff abuse by certain countries has disrupted global trade order
• Japan – Ishin party leader says mostly agreed on conditions with LDP to form coalition
• China’s top trade negotiator Li Chenggang removed from post
• Reserve Bank of New Zealand’s own inflation indicator +2.7% y/y
• China Sept Retail Sale (YoY) +3.0% (expectd 2.9%) & Industrial Production (YoY) +6.5% 5.0%
• China Q3 GDP +1.1% q/q (+0.8% expected)
• Moody’s forecasts China’s GDP data will show a significant deceleration in growth.
• China new home prices have fallen again in September – vicious cycle lower continues
• PBOC sets USD/ CNY reference rate for today at 7.0973 (vs. estimate at 7.1318)
• People’s Bank of China set 1 and 5 year Loan Prime Rate (LPR) rates unchanged, as expected
• China’s September rare earth magnet exports drop to 5,774 tons, down from 6,146 in August
• Trump wants China to buy soybeans, says he believes China will make a deal on soybeans
• US, India to drive copper demand as China’s growth slows; market becomes fragmented
• US Secret Service discovered a killing platform. For Trump assassination attempt?
• JD Vance: no security plan to disarm Hamas; Trump undecided on giving Tomahawks to Ukraine
• UK housing market stalls ahead of November budget
• UK launches ‘Sterling 20’ club of top pension funds to unlock investment
• Kering sells beauty business to L’Oréal to cut debt
• Yen’s moving the right way now! Takaichi closer to being PM.
• New Zealand Q3 CPI +1% q/q (expected +1%) and +3% y/y (expected +3%)
• European Central Bank President Lagarde cautioned on a waning US dollar, tariff inflation
• France downgraded to A+ by S&P. Outlook from ‘negative’ to ‘stable’
• Economic calendar in Asia Monday, October 20, 2025: NZ CPI, China data, PBOC rate setting
• Monday morning open levels – indicative forex prices – 20 October 2025
• Japan has agreed a coalition government – paves way for Takaichi PM – yen a little higher
• Newsquawk Week Ahead: US, UK, Japan and Canada CPI, Flash Global PMIs, Japan PM Vote
• Bessent will meet with He Lifeng next week on trade

Japan: new political coalition confirmed

The Liberal Democratic Party (LDP) confirmed an agreement with the Japan Innovation Party (Ishin) to form a coalition government, paving the way for LDP leader Sanae Takaichi to become the new prime minister. The final agreement is set to be formalised at 0900 GMT today.

In currency markets, the political news saw the USD/JPY pair gap slightly lower (yen strengthening) in early trade, though this was quickly reversed. USD/JPY saw highs around 151.20 before settling back to approximately 150.80. Expect the market to watch Takaichi’s policy stance, particularly on stimulus and its potential impact on Bank of Japan (BOJ) monetary policy.

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New Zealand: inflation at the upper limit

New Zealand released its third quarter (Q3) inflation data, with the annual figure hitting the upper boundary of the Reserve Bank of New Zealand’s (RBNZ) target range.

• Q3 CPI:3.0% year-on-year (y/y), which was in line with expectations but up from 2.7% in Q2 and the highest rate in a year.

• Core inflation: 2.5%.

• RBNZ target band: 1–3%.

• Later in the session, the RBNZ’s preferred underlying measure, the sectoral factor model, printed at 2.7% y/y.

The NZD/USD pair traded a little higher following the release, in line with a generally stronger trend for major currencies against the US dollar today. The market will now focus on the RBNZ’s next move, with the reacceleration of inflation to the 3% ceiling creating a hiccup for policymakers.

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China: mixed data despite GDP beat

China’s Q3 Gross Domestic Product (GDP) surprised to the upside on a quarterly basis, but underlying data highlighted persistent challenges, most notably in the property sector.

Cumulative GDP growth for the first three quarters reached 5.2%, keeping Beijing on track to meet its “around 5%” full-year target. However, the data confirms that the housing market remains a significant drag; new home prices logged their 28th consecutive monthly decline, weighing heavily on consumer confidence and growth prospects.

Separately, the People’s Bank of China (PBoC) kept its benchmark 1-year and 5-year loan prime rates (LPR) unchanged at 3.00% and 3.50%, respectively.

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President Donald Trump made a number of public comments:

• Colombia tariffs: Trump announced plans to hike tariffs on Colombia due to rising tensions over the drug trade.⁶

• China trade: He laid out his demands for China, including a restart of soybean purchases (to at least previous levels), a stop to fentanyl shipments, and an end to the “rare earth game.” He added that he can lower tariffs on China, suggesting a willingness to de-escalate the trade war.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) +2.9%, the prospect of a weaker yen an enticement
• Hong
  Kong (Hang Seng) +2.45%
• Shanghai
  Composite +0.69%
• Australia
  (S&P/ASX 200) +0.23%