Asian equities saw little in the way of firm direction as the region digested Chinese trade and Japanese GDP
USD woes persisted overnight as Asia-Pac currencies took a swipe at the greenback which saw AUD/USD break above 0.8100
Looking ahead, highlights include UK industrial and manufacturing output, Canadian jobs report and Fed’s Harker
Asia equity markets traded mixed following similar indecisiveness in US and as the region digested a slew of economic releases including Japanese GDP and Chinese Trade data. ASX 200 (-0.4%) and Nikkei 225 (-0.4%) were lower as financials mirrored the underperformance in their US peers, with Japan also dampened by a weaker than expected Final Q2 GDP which showed the largest downward revision since the current accounting method began in 2010. Shanghai Comp. (+0.2%) and Hang Seng (+0.6%) were positive despite another OMO skip by the PBoC which resulted to a larger net weekly liquidity drain W/W, as strength in property and energy names kept sentiment upbeat while participants also mulled over the release of mixed Chinese Data where Trade Balance and Exports missed, but Imports surpassed expectations to suggest strong domestic demand. 10yr JGBs gained amid the risk averse sentiment in Japan and as yields tracked the declines seen in their US counterparts, while the BoJ were also present in the market for a total of JPY 880bln of JGBs across the curve.
Chinese Trade Balance (CNY)(Aug) M/M 286.5B vs. Exp. 335.7B (Prev. 321.2B)
Chinese Exports (CNY)(Aug) Y/Y 6.90% vs. Exp. 8.70% (Prev. 11.20%)
Chinese Imports (CNY)(Aug) Y/Y 14.40% vs. Exp. 11.70% (Prev. 14.70%)
PBOC skipped open market operations again for a net weekly drain of CNY 330bln vs. CNY 280bln drain last week. (Newswires)
PBoC set CNY mid-point at 6.5032 (Prev. 6.5269); 10th consecutive firmer fix and strongest since May 2016.
Japanese GDP (Q2 F) Q/Q 0.6% vs. Exp. 0.7% (Prev. 1.0%). (Newswires)
Japanese GDP Annualised (Q2 F) Y/Y 2.5% vs. Exp. 2.9% (Prev. 4.0%); largest downward revision under current method.
ECB said to consider QE options that don’t require rules to be tweaked, sources report. (Newswires)
UK Recruitment and Employment Confederation stated that employers raised starting salaries by the most in about 2 years during August, citing a survey. (Newswires)
USD woes persisted overnight as Asia-Pac currencies took a swipe at the greenback which saw AUD/USD break above 0.8100 to print its highest level since May 2015. In addition, NZD/USD outperformed to reclaim the 0.73000 handle and EUR/USD approached levels last seen at the start of 2015. The PBoC also strengthened its reference rate for the 10th consecutive occasion and set its firmest fix since May last year which pushed CNY to a 21-month high, while USD/JPY languished firmly below 109.00 with a miss on Japanese GDP failing to spur a reaction in the pair.
Gold (+0.3%) extended to above USD 1350/oz and posted its best levels in over a year, as the greenback continued to weaken overnight. Elsewhere, remainder of commodities were relatively quiet with WTI crude futures range-bound, while copper was choppy following mixed trade data from its largest consumer.
China Jan-Aug iron ore imports rose 6.7% Y/Y to 714mln tons and crude oil imports for the same period rose 12.2% Y/Y to 281mln tons. (Newswires)
USGS states hazardous widespread tsunami waves are possible following a magnitude 8.0 quake off Mexico coast. (USGS
Treasuries rallied and yields were between 3-5bps narrower across the curve. Yields on 10s flattened to fresh YTD lows at 2.0340% (lowest since November 2016), and 30s fell to 2.65% (lowest since November 2016). The US 10-Year T-Note future (December) settled 13+ ticks higher at 127-16+.
Fed’s Dudley (Voter, Dove) said sees US policy to continue gradual tightening and that easing financial conditions could warrant somewhat sharper rate increases. In addition, Fed’s Dudley did not repeat expectations for a further hike this year. (Newswires)
Fed’s George (Non-Voter, Hawk) said a gradual approach to rate hikes is appropriate and that it is time to continue to move rates higher. George also commented the US is under full-employment and that she sees labor market continuing to tighten, while she added that inflation is relatively mild. (Newswires)
Fed’s Mester (Non-Voter, Hawk) said she sees gradual hikes and sees the balance sheet run-off to begin, while inflation is to converge towards target over the next year or so. Mester added that Fed must be willing to shift if economy changes materially and that Fed is on a good path regarding normalisation. (Newswires)
US Senate advanced the debt ceiling/storm aid deal, which is now set for a final vote on Friday. (Newswires)
US President Trump fully denied that Gary Cohn is set to leave the administration by end of the year. (Newswires)