Morning Briefing Dovish BoJ hike restores Yen carry appeal

RATES & FOREX RESEARCH FOR CORPORATES 18 September 2026 MARKET DAILY REVIEW – FOREX Extract from a report CHART OF THE DAY MARKET REVIEW - RATES

Morning Briefing OVERNIGHT NEWS ◼ Brent on course for first weekly decline since 28 August. President Trump: nearing a “big decision” on whether to resume major attacks on Iran (Axios). Dollar on top in G10, Yen extends weekly drop to 2.2%. KRW, COP and CLP main laggards in EM. ◼ BoJ +25bp to 1.25%, Yen retreats on 7-2 dovish vote split, dissenters were PM Takaichi appointees and suggest government pressure to go slow on policy normalisation. Mrs Watanabe vindicated for adding Yen shorts. 10y JGB -1bp at 2.99%. Governor Ueda: no specific pace in mind for rate hikes, stage for policy conduct has changed. SG economics f/c next 25bp in December. ◼ USD/CNY slips below 6.70 for first time since January 2023, eighth day of stronger fixing ahead of Trump-Xi meeting next week. Reference rate today fixed at 6.7521, about 455 pips weaker than consensus. ◼ Day ahead: Fed speaker Bowman and Schmid. Euro 1y and 3y inflation expectations, ECB speaker Lagarde. US industrial production. ◼ Nikkei +1.4%, EUR 10y IRS +1.7bp at 3.54%, Brent crude -2.1% at $102.5/b, Gold +0.7% at $4,340/oz.

CALENDAR Key events of the day Chart of the day: Fed/BoJ policy gap unchanged at 275bp after this week’s rate hikes, to narrow 25bp by mid-2027 ECB speaker: Lagarde (12:30) BoJ rate Fed funds % ECB 1y CPI, cons 3.1% yoy,3y, cons 2.8% yoy (10:00) 6.0

US industrial production, cons 0.3% (15:15) 5.0 4.50% US leading index, cons 0.1% (16:00) 4.0

Fed speaker: Bowman (15:30), Schmid (17:45) 3.0 SG forecast 2.0% 2.0

-1.0 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27

Source: SG Cross Asset Research/Corporate

MARKET REVIEW FOREX EUR/USD: overnight range. Second successive weekly drop for the euro illustrates dominance of Fed over ECB policy. Support 1.1410, resistance 1.1560. Large option expiries 1.1400-55 (€8.9bn), 1.1470-85 (€1.8bn) and (€11.1bn). USD/JPY: overnight range. Successful defense of 100wma (153.37) is a possible launchpad for return to 160 after dovish 7-2 BoJ split disappoints yen bulls. Support 155.80, resistance 159.00. National core CPI eased a tick to 1.7% yoy in August. GBP/USD: overnight range. Cable fails to capitalise on lower Gilt yields and BoE hint of possible November rate hike. Support 1.3270, resistance 1.3410. Retail sales +0.5% m/m in August, ex-autos +0.6% (2.7% yoy). EUR/GBP resistance 0.8610. AUD/USD: overnight range. Dip buyers emboldened after defending 50dma yesterday (0.7084). Governor Bullock says RBA needs to decide if key rate is sufficiently restraining to bring inflation back to target. Support 0.7070, resistance 0.7170. RATES EU: 10y IRS firms to 3.55% after dip yesterday to 3.508%, ignoring lower oil and nat gas. Support 3.43%, resistance 3.57%. Focus on ECB president Lagarde and CPI expectations in the wake of surge in energy prices. IG primary t issuance this week totals €41bn. US: 10y IRS steady at 4.55%, down 10bp from this week’s high. Oil prices will drive yields into next week (US/China and Gulf State discussions). Support 4.49%, resistance 4.62%. 2y/10y UST flattens to 25bp, June low at 23.8bp. Citi lifts weekly IG tally to $54bn. UK: 10y IRS firms to 4.82% after 21bp drop from Tuesday’s high. Support 4.68%, resistance 4.86%. BoE signal of possible November rate increase, and QT pause until April 2027, flattened the long end of the curve and caused 3bp widening in 10y swap spreads. More insight from SG Research: Daily news Market alert Special reports

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The week in review 1. Serious about inflation, mid-cycle policy adjustment underway in the US, stocks and credit dig in. The partial restoration of oil supplies in Saudi Arabia through the East West country pipeline and hawkish rate increase by the Fed put a temporary halt to the selloff in global fixed income. Global equities and credit markets dug in, drawing support from confidence in the global economy. US control retail sales boomed 1.4% m/m in August and weekly jobless claims fell back…