Market Roundup
- Japan July corp service price index +0.2% m/m, +0.6% y/y to 103.1.
- Australia Q2 construction work done +1.6% q/q, -1.5% eyed.
- NZ July trade balance NZ$649 bln deficit, NZ$750 mln eyed, annual balance NZ$2.69 bln deficit, NZ$2.66 bln eyed, imports NZ$4.85 bln, exports 4.20 bln.
- Singapore July industrial production +1.0 pct m/m after seasonal adjustment; reuters poll +2.7 pct
- Singapore July industrial production -6.1 pct y/y; reuters poll -3.3 pct
- China cuts rates to stem crisis but doubts grow on foreign reserve buffer
- China up margin requirements on stock index futures, restricts daily open positions, ups transaction fees
- Norway’s Prime Minister says Norway economy not in crisis, but challenges growing
- Hungary Econ Ministry Official says 2015 budget on track for 2.4 PCT/GDP deficit target based on figures of first seven months
- Japan CabSec Suga says PM Abe and US Pres Obama agree to work closely on global economic issues after phone conversation, G7-central banks working closely on markets, hopes China steps stabilizes markets
- RBA Gov Stevens says fiscal policy debate should be about more growth
- Australia banking regulator says too early to say whether more curbs on housing investment needed
- NewZealand FinMin English says recession risk up on China hard landing
Economic Data Ahead
- 0600 ET/ 1000 GMT) GB Aug CBI distributive trades – retail sales, +18% y/y eyed; last +21%.
Key Events Ahead
- (0640 ET/1040 GMT) ECB ChiefEcon Praet speech at Mannheim EEA Congress (to August 27).
FX RecapUSD/JPY: In volatile trading, USD/JPY was up 0.2 percent at 119.12 yen but off the high of 120.40 scaled overnight. The dollar was subdued against the yen on Wednesday as already fragile risk sentiment weakened. China’s policy easing steps failed to shore up battered Shanghai shares, the Shanghai Composite Index was down 2.3 percent. U.S. services PMI, consumer confidence and new home sales due later in the day will be watched for further direction in the pair. At the time of writing the major was trading at 119.39, with major supports on the downside seen at 118.25 (Aug 25 Low, 50% Fibo).GBP/USD: Cable is currently trading at 1.5687, with immediate resistance at 1.5732 (30 DMA Upper Bollinger). Rebound in the pair was capped at 1.5721, skeptical if cable can hold its gains. Stocks whippy but many Asia bourses currently up, risk supportive. Rally in Chinese equity markets stabilized the risk sentiment and supported the US dollar. UK Mortgage approvals rise % in July BBA, CBI trends at 1000GMT AUD/NZD: Another choppy trading session for the antipodeans, with sentiment remaining brittle amid concerns over China’s economy. NZ trade data beat forecasts (Tuesday), posted a smaller-than-expected monthly trade deficit in July, while dairy exports rose for the first time in 11 months. Data boosted NZD, relative outperformance vs AUD pushed cross sub-1.10 to 1.0950 base. AUD/NZD edges lower on the day, currently at 1.0981, day’s range 1.1030/1.0958, immediate support is seen at 1.0912 (Daily Low Aug 24) and resistance at resistance at 1.10 (cloud base). USD/INR has made a high 67.03 on Monday after blood bath in Indian stock market. Indian benchmark BSE 30-share Sensitive Index (Sensex) recorded its steep intraday crash since 2009 of more than 1700 points. Indian rupee is under pressure for past two weeks, since China devalued its currency to make its export competitive in the world markets. The pair declined till 65.87 from 67.03 level on Monday. Major resistance is around 69.22 (Aug 26th high) and any break above targets 73.40/76 in short term. Minor resistance is seen at 67.75/68.50 levels. On the downside minor support is around 65.85 and any break below will drag the pair further down till 65.40/65/64.46 in short term.Equity RecapAsian shares struggled on Wednesday as investors feared fresh rate cuts in China would not be enough to stabilise its slowing economy or end a collapse in Chinese stocks that is wreaking havoc in global markets.MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent and remained just shy of a three-year low hit in the previous session.After yet another rollercoaster day, China’s CSI300 index ended down 0.6 percent, while the Shanghai Composite Index fell 1.3 percent to fresh eight-month lows. Both had been up 3 percent at one point.Japan’s Nikkei was among the few bright spots, rising 3.2 percent on bargain hunting after six days of declines.Korea’s benchmark Kospi index closed up 2.59 pct, while Australia rose 0.7 percent.U.S. stock index futures fell in early Asian trade before edging back up 0.5 percent.Treasury RecapThe 10-year Malaysian government bond yield rose to 4.4418 percent, its highest since May 2009. The five-year yield advanced to 4.101 percent, also the highest since November 2008.New Zealand government bonds edged up, pushing yields 1.5 basis points lower at the long end of the curve.Australian government bond futures were split, with the three-year bond contract up 2 ticks at 98.270. The 10-year contract was down half a tick to 97.3700. Earlier in the week, both contracts climbed to their highest since April.Commodity RecapGold slipped on Wednesday as equities bounced back after China eased monetary policy further. Spot gold was down 0.4 percent at $1,135.26 an ounce by 0609 GMT, on track for a third day of losses. U.S. gold for December delivery dropped 0.3 percent to $1,135.30 an ounce.Crude oil futures edged up on Wednesday, but were still not far off 6-1/2 year lows. Brent was trading 25 cents higher at $43.46 a barrel as of 0641 GMT, and U.S. October crude was up 26 cents at $39.57 a barrel.
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