Forex news for Asia trading Friday 1 February 2019
- Recapping a couple of RBA and Australian dollar views
- Italian police dog sniffs out gold ingots, cash with value of 1.3m euros
- Reuters reports that the PBOC told banks to moderate pace of lending in January
- Bank of England meet next week - an early preview
- AUD response to the poor China PMI (spoiler: the response came before the data)
- China data - Caixin manufacturing PMI (Jan): 48.3 (vs. expected 49.6)
- News wire reports view that PBOC may cut its benchmark interest rate today
- More China comments on trade talks - China to import more ag products from US
- PBOC sets USD/ CNY reference rate for today at 6.7081 (vs. yesterday at 6.7025)
- China official comments on trade talks with US - says important progress made
- Ahead of the RBA meeting on Tuesday and SoMP on Friday - outlook
- Japan data - Nikkei manufacturing PMI, final (Jan): 50.3 (preliminary was 50.0)
- PPI data from Australia for Q4 2018: 0.5% q/q (Q3 was +0.8%)
- Venezuela to sell 15 tonnes of gold to the United Arab Emirates in coming days
- EUR/USD - US-EU trade negotiations coming soon are a key risk
- Japan (Dec.) unemployment rate: 2.4% (expected 2.5%)
- Australia house prices (CoreLogic, January): -1.2% m/m (prior -1.3%)
- On the RBA: 'continues to underestimate the threat from the weaker housing market'
- Brexit catch up - investment in UK car production fell by almost half in 2018
- Lighthizer says Chinese commitments on trade need to be specific, enforceable
- White House statement on US - China trade talks - discussed role of currencies
- Australia CBA / Markit manufacturing PMI (Jan): 53.9 (preliminary 54.3)
- Trade ideas thread - Friday 1 February 2019
- More on the US - China trade talks, Trump - Liu meeting
- Australia data - AiG manufacturing PMI (Jan.): 52.5 (prior 49.5)
It was a heavy day of PMI (manufacturing) data from Asia, with a lot of dour results indeed. Japan, South Korea, Taiwan and China all reported. I'll come back to China.
The South Korean PMI (joint lowest since Nov. 2016) showed new export orders fell for the 6th month in a row. South Korean exports are often cited as a bellwether for the health of the global economy, this does not inspire confidence.
The Japanese PMI showed expansion, but the headline figure hit a 29 month low, and again the view on exports was discouraging; new export orders dropped at their fastest in two and a half years. Business confidence fell for the 8th month in a row
Taiwan's PMI (lowest since Sep. 2015) showed that new export work had its steepest fall since August 2015.
China Caixin Manufacturing PMI showed a huge drop on the month, from 49.7 in December to 48.3. January is the lowest reading for this indicator in three years. Yesterday's official (from the stats people, the NBS) manufacturing PMI was not nearly so bad, but as I noted early today and again later in more detail:
- the Caixin has a greater representation of privately-owned enterprises (POEs) than the NBS PMI does. The NBS PMI has a great representation of state-owned enterprises (SOE). The point is that SOEs can be induced by government to do more to support the economy. That's not the case with POEs, hence the two PMIs can often differ markedly, as they have done today.
The Australian dollar was a mover on the session. A poor China PMI is a negative input for the AUD, but to add some interest today the currency fell in the hour or so leading up to the release. Looked like the data was very leaky indeed.
CAD lost ground also. The New Zealand dollar is little changed, and elsewhere across the forex majors movement was subdued also. Cable is a little weaker, EUR/USD is barely net changed while USD/JPY is running along not far from its overnight session high.
Other news on the session centred on US and China comments re the round of trade talks just concluded in Washington. Comments were positive from both sides, but the only specific outcome was China is going to buy more soybeans (you'll recall China was already a big buyer of US beans before the trade war so I guess we are just getting back to even?) and that there will be further talks in Beijing following the lunar new year holiday when a US delegation jets in (will include Lighthhizer and Mnuchin).
Still to come:
