Forex news for Asia trading on Wednesday 20 October 2021
China-related:- Early heads up to a meeting of China's top leaders - Central Committee plenum dates set
- China's yuan is at its highest since February 2016 (vs. its trade-weighted index)
- China new home prices in September +3.8% y/y (prior +4.2%)
- China 1 and 5 year LPR both left unchanged at 3.85% and 4.65%
- China has suspended its imports from another Australian meatworks
- PBOC sets USD/ CNY mid-point today at 6.4069 (vs. estimate at 6.4090)
- China says foreign direct investment January-September is +19.6% y/y
- China's most active futures for thermal & coking coal, coke all limit down
- IMF's Berger says Evergrande risk to China is contained for now, but ...
- China state media says that the expectation of a RRR cut from the PBOC in Q4 has fallen
- China's state planner threatens coal market intervention
Other:
- Fed speakers - 6 of them - on the schedule for Wednesday, plus the Beige Book
- New Zealand coronavirus cases are likely to get much worse before they get better
- Biden's agenda being negotiated through Congress - hopes up for resolution late next week
- Japan trade balance for September Y -622.8bn (expected Y -519bn)
- Australia - Westpac leading indicator for September -0.02% m/m (prior -0.27% m/m)
- JP Morgan on what to watch for USD/CAD to 1.20 ahead
- Updated oil price forecasts via Morgan Stanley, see Brent at US$95/bbl in Q1 2022
- Fed's Waller spoke Tuesday US time - recap and full text
- Dep US Treas Sec said will not allow the Taliban access to Afghan central bank reserves
- Private oil survey data shows build in crude oil inventory
- Trade ideas thread - Wednesday 20 October 2021
- 4 reasons for NZD/USD to head above 0.7450 by year-end
Much of the focus of the session was on China with early limit moves lower for coal and coke due to the overnight news on China's state planner (the National Development and Reform Commission of the People's Republic of China (NDRC)) threatening intervention in the coal market following a meeting with key players domestically.
The barrage of news and data continued out of China, as you can see above I've rejigged the format of the bullet-point links to headlines for the day to group the China, and China-related, items together.
From the PBOC we had a substantial injection of funds via open market operations (OMO), following a string of days of drains or neutral. The injection is said to be related to tax season payments and government bond issuance. The PBOC have been consistent in saying that it would be keeping domestic liquidity conditions stable using medium-term lending facilities (MLF - we saw one of these conducted last Friday) and OMOs (we saw this today).
The yuan hit a five and a half year high against its basket today.
Elsewhere across major FX:
- USD/JPY hit a nearly four high above 114.60, yen crosses higher also of course
- EUR, AUD, NZD, GBP and CAD all rose for gains (not overly large) against the USD. 'Reflation' was the word again with global bond pricing higher prevalent. Indeed, the spread between the US 3 mth and 10 year hit its widest since June and the 10 yr yield moved to a 5 month high.
Having noted the move higher for currencies I should also add that since the highs there has been some retracement across the board, to varying extents.
USD/JPY to its highest since November of 2017 today, monthly candles: