- More from BlackRock - still like equities on various time horizons
- Bitcoin bounces from under 30K: AUD, US equity index futures bouncing too
- Reports the US is weighing ban on companies selling advanced chipmaking equipment to China
- Tesla has halted production its Shanghai plant
- More from BOJ's Uchida - No plan to change 50bp band set around 10 year JGB taarget
- Quarterly retail sales data from Australia: Q1 +1.2% q/q (vs. expected +1.0%)
- Australian April business confidence 10 (vs. prior 16)
- Senior BOJ official says the Bank's monetary policy has pushed up prices, economy
- PBOC sets USD/ CNY central rate at 6.7134 (vs. estimate at 6.7086)
- China coronavirus - Beijing to do another round of mass testing in at least 3 areas
- Japan fin min Suzuki says FX stability is important, rapid moves are undesirable
- Bitcoin dropped (briefly, for now) under USD30K. Risk assets more broadly lower too.
- US President Biden is to speak Tuesday, regarding inflation, at 11.30 am Washington time
- JP Morgan (Kolanovic) affirms again “We stay pro-risk"
- China’s Vice Premier Liu He has reaffirmed China's Covid Zero policy
- Japan data - March household spending +4.1% m/m and -2.3% y/y
- Australian weekly consumer confidence survey 90.5 (prior 90.7)
- Biden says he is worried Russian President Putin doesn't have a way out of the Ukraine war
- UK data - Consumer spending +18.1% from April 2019
- UK data - BRC Like-for-like sales in April fall 1.7% y/y (prior -0.4%)
- Short-seller warns that Musk's $44bn Twitter bid could get repriced lower
- New Zealand Card Retail Sales +7% in April m/m (prior -1.3%)
- BoA on Wednesday's US CPI. A catalyst for an equity market base?
- BlackRock sees a 'rapidly worsening' outlook for China's economy - downgrades equities
- Brexit - UK Times reports Truss is ready to drop the Northern Ireland Protocol
- US politics - Biden says prepared to split Ukraine aid, Covid funding bills
- Goldman Sachs appears to have targeted EUR/USD at 1.13?
- Trade ideas thread - Tuesday 10 May 2022
- Fed's Brainard comments on the Bank's Financial Stability Report
- Federal Reserve Financial Stability report out now - identifies liquidity risks
- Forexlive Americas FX news wrap: Equities in shambles. Big levels break in AUD and CAD
It was a volatile morning in Asia trade. BTC/USD led the way, dropping under US$30K. Equity index futures and risk FX were hit lower in the wake of the crypto drop. There is an argument that those caught holding declining crypto who are unable, or unwilling, to hit bids and get out are selling more liquid assets (i.e. the contagion argument) and driving these down. I am not sure that holdings of crypto are that widespread, or widely held by those with the volume to shift more established markets, but I thought I’d float this as the correlation of the moves were evident today (of course this is not necessarily causation I should add in).
On the data front we had Japan’s household spending climbing for the first time in three months in March (data for this month were released today). The lift in spending followed the relaxation of virus restrictions across the nation. Also from Japan were remarks from a senior official of the Bank of Japan, Shinichi Uchida is Executive Director/Head of Monetary Policy at the Bank of Japan, reaffirming monetary policy from the Bank will stay very accommodative indeed (see bullets above). Uchida specifically said there is no plan to tweak the 50bps band set around the Bank’s 10yr JGB yield target, adding that widening the band is undesirable as it would effectively be a rate hike (or at least acquiescing to tighter policy).
Back to data, Australia’s business conditions strengthened further in April. The survey (National Australia Bank Business Survey for April) showed that labour, input costs and output prices remained elevated. The RBA will take note and will continue with further rate hikes.
As mentioned, equity index trade and 'risk' FX tagged along behind the crypto moves for direction. AUD/USD, for example dropped under 0.6920 before bouncing back above 0.6960. NZD followed a similar pattern. EUR and GBP were more subdued against the dollar. Both have gained during the session. USD/JPY fell toward 129.80 and has since recovered to be circa 130.5 and little net changeed on the session.
The PBOC set the reference rate weaker again for the onshore yuan (CNY lower against USD).
US equity futures, 10 minute candles ES: