Forex news for Asia trading on Friday 22 October 2021

I'll get to Evergrande in a moment, it was market-moving news, but before that a couple of notes on some other developments.

Snap shares fell sharply in after-hours extended trading after the company missed Q3 revenue expectations and gave wary guidance for the quarter ahead. Snap's advertising business revenue fell with Apple's privacy changes introduced earlier this year cited by analysts; of concern also is the supply chain tightness seeing advertisers pull back on advertising products that may not be available for some time. Other social media and digital advertising stocks also saw price drops in after-hours trade.

Around the same time we had reports on remarks from the new Bank of England chief economist, Huw Pill, saying UK inflation is likely to head close to or above 5% early in 2022 and that the Bank no longer needs the emergency policy settings like after the pandemic intensified. All inputs for those looking for earlier BoE hikes (November is a possibility).

A little later in the morning the Reserve Bank of Australia was buying April 2024 bonds in order to lower the yield on those bonds towards the stated RBA target of 0.1%. It had been as high as circa 0.17% and there was some (mild only) speculation in the market the RBA was dialling back its commitment to holding rates low. I should note its not likely the RBA would make such a policy change without at least some sort of verbal signalling prior to dropping its commitment. Having said this the Bank did take quite some time to enter the market to drive the yield back towards target, today's bond-buying was the first from the RBA since February.

The Australian dollar dribbled just a few tics lower after the RBA buying.

This brings us to Evergrande. The firm paid USD83.5m, which was due on September 30. There was a 30-day 'grace' period before a default would have been registered. Evergrande made payment just a few days ahead of that running out. AUD, NZD, CAD and GBP all rallied on the news, as did USD/JPY. EUR/USD was slow. Yen crosses, thus, moved higher.

Slipping by almost unnoticed was the news that Fitch Ratings has downgraded another China property development firm, Sinic, to Restrictive Default and withdrawn ratings.

From the People's Bank of China today we had another large injection of funds through open market operations, the third day in a row the PBOC net injected 90bn yuan. For the week the total injection is a substantial 260bn yuan.

AUD/JPY had a quick rise on the Evergrande news but has since given some back:

Forex news for Asia trading onFriday22October 2021