Forex news for Asia trading Tuesday 6 August 2019
Due soon folks - coming up:
- NZ data: 2 year inflation expectations down to 1.86%
- Goldman Sachs adds in a third expected Fed rate cut
- North Korea generated USD 2bn for weapons programs using cyber attacks
- Yuan not allowed to drop as far as expected - recap
- China says will be forced to take countermeasures if US. deploys intermediate-range missile in Asia
- Australia - Trade balance for June: AUD 8036m (expected 6000m)
- Australia - ANZ job advertisements for July: 0.8% (prior 4.6%)
- PBOC sets USD/ CNY reference rate for today at 6.9683 (vs. yesterday at 6.9225)
- FX option expiries for Tuesday August 6 at the 10am NY cut
- China moves to stabilise the yuan, PBOC issuing bills in Hong Kong
- Chinese state media says the US should take responsibility for China stopping US agricultural imports
- Japan Ministry of Finance says no plan for MoF, BOJ, FSA meeting today
- From Fed Chairs Volcker, Greenspan, Bernanke and Yellen says need Fed independence
- Another call for earlier RBA rate cuts
- Japan - Labor Cash earnings for June: 0.4% y/y (expected -0.6%)
- Japan Household Spending for June: 2.7% y/y (expected +1.1%)
- Australia weekly consumer sentiment ANZ/Roy Morgan survey: 115.8 (prior 118.5)
- US Treasury Secretary Mnuchin said if China stops manipulating the yuan it'll be labelled a manipulator (yes, really)
- Trump administration says its monitoring North Korea situation closely (insert LOLs here)
- More on the UK retail sales data - weakest July sales growth in more than 20 years
- UK data - BRC sales data, like-for-like for July: +0.1% y/y(expected +0.5%)
- NZD jumps on huge beat for New Zealand employment data
- New Zealand Q2 unemployment rate 3.9% (vs. expected at 4.3%)
- Westpac on the China US trade war transitioning into a currency war
- Yen moving higher as US (finally) labels China a currency manipulator
- Mnuchin says China is a currency manipulator
- South Korea's Defence Ministry confirms North Korea fired projectiles into East Sea
- More rate cuts from the RBNZ now expected (ANZ)
- North Korea has fired off two missiles
- Former ECB Vice President Costancio - reckless Trump
- North Korea once again questioning South Korea/US joint military drills
- USD/CNY psychological 7 level breached, now what? (7.4?)
- Trade ideas thread - Tuesday 6 August 2019
- China may weaponize the yuan. ICYMI, there is no 'may' about it.
- Major US stock indices close with (go on, have a guess!) …. big declines
The focus was firmly on China, both yuan moves and relations with the US.
The session kicked off with the US Treasury coming out with the announcement to label China a currency manipulator. China had been making efforts to prop up the yuan and stop it falling too hard but as soon as the PBOC stopped intervening to stem its fall and allowed the market to take it lower, US President Trump stepped up his attack. US Treasury Secretary Mnuchin obliged and the statement was issued.
Markets continued their moves selling risk and buying havens, yen a big beneficiary. USD/JPY fell toward (but not through) 105.50. AUD lost ground towards (and again, not through) 0.6750. EUR gained. NZD managed to gain ground also, helped by a huge beat on employment data, the unemployment rate measured at 3.9% against 4.3% expected.
As we approached the time for the daily PBOC onshore yuan refernce rate setting news hit that the Bank was to sell offshore yuan bills in Hong Kong next week. The long story short on the implications of this is it will tend to support the yuan. Which runs counter to the story of the PBOC allowing the currency to weaken without restraint. The support for the yuan was further confirmed at the mid-rate setting. Despite USD/CNY being set at its highest since 2008 it was not as high (ie as weak for CNY) as was widely expected. Moves reversed, with gains for equities and the AUD and losses for the yen.
USD/CNH turned around:
USD/JPY moved as high as to above 106.30 while AUD/USD was spurred along by a big beat on the trade surplus to highs circa 0.6790 (ps. Check out the trade surplus post, there was a sharp slump in imports so the data is not all good news).
We now await the Reserve Bank of Australia monetary policy decision, which will be followed on Wednesday Asia time by the Reserve Bank of New Zealand .
