ForexLive Asia FX news wrap: PBOC weakens the CNY again
Forex news for Asia trading Friday 9 August 2019
- RBA's Debelle says can see the impact of the lower AUD on parts of the economy
- More from RBA Gov Lowe - no implications for the RBA from the RBNZ 50 point rate cut
- ANZ on oil - selloff overdone
- China inflation data for July, CPI 2.8% y/y (2.7% expected) PPI -0.3% y/y (vs -0.1%)
- RBA Statement confirms rates to be lower for longer
- PBOC sets USD/ CNY reference rate for today at 7.0136 (vs. yesterday at 7.0039)
- BOJ increases its buying of JGBs
- Japan economy minister Motegi says data shows Japan economy moderate recovery
- RBA Lowe's says the lower AUD is helping the Australian economy
- More from RBA's Lowe (hitting the AUD) - prepared to do unconventional policy if needed
- More from RBA Gov Lowe - Not considering rate rises until comfortable with inflation and unemployment rates
- Majority of economists expect the FOMC to cut by 25bp in September 2019
- Japan preliminary Q2 GDP: 0.4% q/q (vs. expected 0.1%
- RBA governor Lowe says rates to remain low for an extended period
- PBOC adviser says China is capable of keeping yuan stable
- RBNZ Gov Orr says NZD exchange rate is competitive
- New Zealand - ANZ Truckometer for July: +4.1% m/m (prior -4.5%)
- Levels to watch (support, resistance) for AUD/USD in the session ahead
- UK says will postpone government spending review until 2020 due to Brexit
- US to delay Huaweii licences in response to China stopping crop buying
- Plenty still to come on Italian election talk
- Brexit - UK PM reportedly ready to hold election if no confidence vote succeeds
- Trade ideas thread - Friday 9 August 2019
The day started off with activity after news crossed that the US administration was holding back permission for tech companies to deal with Huawei again. The reports were from unnamed sources citing retaliation for China halting purchases of US agricultural products. The forex response was AUD/JPY marked lower, ie AUD selling and yen buying, as you would expect on these sorts of indications of no lessening in US-China tensions. The offshore yuan weakened also.
After the initial drop for AUD/JPY it stabilised and has spent the session here recovering.
Other news of note was Reserve Bank of Australia Governor testimony to parliament (committee) in which he reiterated recent RBA themes. Check the bullets above for more but there was nothing really fresh in his comments. While he was speaking the RBA issued their latest Statement on Monetary Policy (SoMP) with downgrades to forecasts ... but with a still optimistic take despite this.
AUD, as I alluded to, recovered some of its earlier losses throughout the session and as I update is barely changed from late US levels.
Japanese GDP data for Q2 (preliminary) came in at a solid beat indeed. Despite the positive signs on the economy (to the extent the results were so much above expectations) the inflation indicator in the figures, at 0.3% y/y, will be another disappointment for the BOJ. They're accustomed to that though.
China developments today centred on CPI and PPI data. The CPI is edging up but PPI fell into negative territory y/y, which does not augur well for business profitability. A higher CPI will give the PBOC pause for thought over any loosening policies. As a counter to this much of the driving influence for the higher CPI is transitory (or so we're told), which alongside such a weak PPI read is indicative of continued PBOC easing.
Of course the onshore yuan mid-rate setting was a focus again. And, like Thursday, today it came in weak (for the CNY, highest USD/CNY for the week) but not as weak as was expected. The PBOC is letting the yuan go, but not overly quickly.
EUR, GBP, CAD confined to tight ranges. NZD managed to eke out a gain of a few points.
Still to come: