Market Roundup
- Australia August MI expected inflation 2.7% weighted mean, 3.7% trimmed mean, July 2.6% and 3.4%.
- NZ July PMI 53.5, June revenue 55.1, employment and new orders down.
- NZ July REINZ median house prices +5.5% m/m, +11.6% y/y, prices at record.
- NZ July food prices +0.6% m/m, best in 6-mos, +1.2% y/y, June +0.5%, -0.1%.
- PBOC sets USD/CNY mid-point at 6.4010, 6.3306 yesterday, last close 6.3870.
- PBOC - No basis for continued CNY depreciation (despite higher USD/CNY mid-point), ample FX reserves to support CNY, to prevent abnormal cross-border flows, to promote unified onshore-offshore Yuan rates.
- PBOC ViceGov Yi Gang - Loose monetary policy adding to CNY pressure, CNY could rise in future, days of regular FX intervention over, no need to adjust CNY to promote exports, talk of 10% depreciation groundless.
- CNY devaluation more likely to boost than hurt China commodity imports.
- BOJ Policy Board Shirai - CPI likely to hit 2% by March '17 (not H1 FY '16/17 as posited by Gov Kuroda, majority on board).
- Japan PM advisor Hamada - Not concerned with China developments, any ill effects could be offset by more BOJ ease.
- Japan June core machinery orders -7.9% m/m, still +16.6% y/y, -5.6% and +16.4% eyed, Q2 core orders +2.9% q/q, +0.3% eyed in Q3.
- MoF flow data week-ended August 8 - Japanese sell net Y14.5 bln foreign stocks, buy Y124.4 bln bonds, Y57.5 bln bills; foreign investors buy net Y357.3 bln Japanese stocks, Y819.2 bln bonds, trln bills.
- Weak yen's allure: Nissan to make No American SUV at home.
- Basel III regulations- Japan's megabanks shore up capital with new instrument, perpetual subordinated bonds, banks likely to issue Y3 trln.
Economic Data Ahead
- (0245 ET/0645 GMT) France July HICP - final, -0.5% m/m, +0.3% y/y eyed; flash -0.1%, +0.3%.
- (0300 ET/0700 GMT) Spain July CPI, -1.0% m/m, unchanged y/y eyed; last +0.3%, +0.1%.
- (0300 ET/0700 GMT) Spain July HICP, -1.6% m/m, -0.1% y/y eyed; flash -1.6%, -0.1%.
- (0315 ET/0715 GMT) Switzerland July producer/import prices; last -0.1% m/m, -6.1% y/y.
- (0330 ET/0730 GMT) Sweden July CPI, -0.3% m/m, -0.4% y/y eyed; last -0.3%, -0.4%.
- (0330 ET/0730 GMT) Sweden July CPIF, -0.2% m/m, +0.6% y/y eyed; last -0.2%, +0.6%.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 270k eyed; last 270k.
- (0830 ET/1230 GMT) US July retail sales/ex-autos, +0.5%, +0.4% m/m eyed; last -0.3%, -0.1%.
- (1000 ET/1400 GMT) US June business inventories, +0.3% m/m eyed; last +0.3%.
- (0830 ET/1230 GMT) US July import/export prices, -1.1%, -0.3% m/m eyed; last -0.1%, -0.2%.
Key Events Ahead
- N/A Sweden SEK500 mln each 0.125% and 1.0% 2019 and 2025 govt bond auctions.
- (0730 ET/1130 GMT) ECB July policy meeting minutes.
FX Recap
EUR/USD is supported above 1.1100 levels and currently trading at 1.1140 levels. It has made intraday high at 1.1189 and low at 1.1131 levels The Euro managed to extend its gains across the board this week and is now challenging key-resistance barriers. China's central bank devalued its currency against the US dollar for the third day in a row on Thursday as the bank tries to align the value of its currency to the offshore trading value. Today Germany and France CPI data may drag attention to the parity. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported below 124.00 levels and posted a high of 124.47 levels. It has made intraday low at 124.07 and currently trading at 124.45 levels. The greenback keeps the upper edge over its Japanese counterpart in Asia as PBOC Yuan fix impact fades after the central bank's official Yi Gang talked up currency and that now this FX development becomes a new normal. Moreover, the major also rebounded higher after the yen weakened following Japan's PM Adviser Hamada hinted at further BOJ easing to counter the effects of Yuan devaluation. While worse than estimates Japan's core machinery orders data also dampened the sentiment around the Japanese currency. Looking ahead, retail sales and weekly jobless claims from the US due for release later in the New York session, is expected to have major influence on the USD/JPY moves. Japan's core machinery orders plunged 7.9% month-on-month in June, according to data from Japan's Cabinet Office on Thursday, coming in weaker than the forecast decline of 5.3%. The poor outcome of today's data will likely add to calls for the government and central bank to increase efforts to support the economy. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.
GBP/USD is supported above $1.5600 levels. It made an intraday high at 1.5636 and low at 1.5609 levels. Pair is currently trading at 1.5618 levels. Yesterday average UK weekly earnings ex bonuses for June remained robust at 2.8% year-on-year, while including bonuses the figure disappointed and printed 2.4% and dipped from 3.2% previously. The unemployment rate for June stayed at 5.6%. House prices in UK rose faster in July as demand from buyers picked up, but the number of homes for sale fell to a record low, according to the latest monthly report from surveyors. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported above 0.6600 levels and trading at 0.6614 levels and made intraday low at 0.6590 and high at 0.6641 levels. The kiwi came under pressure after Standard and Poor's rating agency placed Fonterra's rating on credit watch negative. However, another Yuan intervention weakened the US dollar on speculation it might postpone the Fed's rate hike into 2016. Meanwhile, markets now await key US economic release later today for further momentum on the pair while NZ retail sales data due tomorrow will also be closely watched. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7378 levels. It has made intraday high at 0.7409 levels and low at 0.7332 levels. The expected inflation rate (30-per-cent trimmed mean measure), reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, rose by 0.3 percentage points to 3.7 per cent in August from 3.4 per cent in July. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Japan's benchmark Nikkei 225 index rose 0.25% to 20,443.32 points in morning trade, but Tokyo's broader Topix gauge tumbled 0.36% to 1,659.69 points.
Hong Kong's benchmark Hang Seng index advanced 0.55% to 24,048.56 points shortly after markets opened for the day, and mainland China's benchmark Shanghai Composite grew 0.27% to 3,896.18 points at the same time.
Korea's benchmark Kospi index fell 0.27% to 1,970.22 points this morning in Seoul. The Bank of Korea kept the benchmark rate at a record-low 1.5% on Thursday.
The benchmark Australian S&P/ASX 200 index rose 0.56% to 5,412.40 points in Sydney, supported by the big banks and some of Australia's largest miners.
New Zealand's benchmark S&P/NZX 50 index eased 0.18% to 5,746.72 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes up 0.22 pct at 5,394.10 points.
Tokyo's Nikkei average closes up 0.99 pct at 20,595.55.
Treasury Recap
BOJ offers to lend Y823.1 bln of JGBs on spot basis through 8/14 as a secondary source of JGBs (Offer in the morning). Japan 03-month treasury discount bill auction lowest price 100.0010, average price 100.0014, bids accepted at lowest price 49.0143 pct.
India's benchmark 10-year bond yield falls 5 bps to 7.75 pct in opening deals after record low CPI.
Commodity Recap
Gold edged lower on Thursday as the dollar firmed, but the metal kept near a three-week peak as a weaker Chinese Yuan raised doubts about the pace of expected interest rate hikes by the U.S. central bank. Spot gold was off 0.3 percent at $1,121.90 an ounce by 0257 GMT, after earlier peaking at $1,126.31, its loftiest since July 20. The dollar gained 0.2 percent versus a basket of currencies.
Oil prices were traded with small gains on Thursday, with investors digesting the fresh stockpiles report as well as the latest news from China. Futures for WTI were rising 0.21% to $43.39 per barrel, while Brent futures grew 0.30% to $50.33 per barrel. A separate report from OPEC revealed on Tuesday that non-OPEC supply for this year is likely to rise by about 90,000 bpd to 1.38 million bpd, with the oil cartel predicting world demand for oil is due to improve this and next year.
