- UBS have eyes on China's Caixin Services PMI for Politburo stimulus action
- Fed's Goolsbee speaking again on Tuesday, 1 August 2023
- Japan fin min Suzuki: Will closely monitor FX market moves
- China's Caixin Manufacturing PMI dropped into contraction July - stimulus hope remains
- China June 2023 Caixin / S&P Global Manufacturing PMI 49.2 (prior 50.5)
- Japan eco min says the BOJ YCC decision intended to help sustainability of easing
- China's state planner has issued a statement to extend loans to the private sector
- Australian housing finance data for June, home loans value -1% (expected +1.8%)
- Australian June Building Permits -7.7% m/m (expected -8.0%)
- PBOC sets USD/ CNY central rate at 7.1283 (vs. estimate at 7.1495)
- Russian state media reporting of a drone strike on a high rise building in Moscow
- Japan Jibun Final July Manufacturing PMI 49.6 (prior 49.8)
- Goldman Sachs has revised its global oil demand forecast, but left price target unchanged
- South Korean July exports and imports both slump more than expected
- Australian weekly consumer confidence 78.4 (prior 75.2)
- Japan June Unemployment rate 2.5% (vs. expected 2.5%)
- UK inflation data - July BRC Shop Price Index +7.6% y/y (prior +8.4%)
- Australian July Manufacturing PMI (final) 49.6 (prior 48.2)
- New Zealand June Building Permits +3.5% m/m (prior -2.2%)
- Morgan Stanley sees potential for a late cycle US equities rally, similar to 2019
- Bank of America expects the Reserve Bank of Australia to its hike cash rate by 25 bp today
- JP Morgan cite 4 reasons for lower US 10 year Treasury yields, have a year-end 3.5% target
- ANZ: India’s commodities demand to surge, could cover over half of China demand shortfall
- Forexlive Americas FX news wrap 31 Jul
- Reserve Bank of Australia statement due Tuesday, 1 August 2023 - previews
- US equities finish off another solid month with gains. Value leads
- Trade ideas thread - Tuesday, 1 August 2023
The USD/JPY uptrend since Friday’s BOJ statement extended a little further again here today, with USD/JPY tracking to a high circa 142.80. There was really no new catalyst, but comments from both the Japanese Economic Minister Goto and Finance Minister Suzuki saying that the Bank of Japan decision last week was meant to increase the sustainability of monetary easing by making YCC more flexible and that it did not represent a shift in the Bank’s stance of easy policy did help to weaken the yen when they crossed.
The data point of focus for the session was the second manufacturing PMI from China for July, that from Caixin/S&P Global. On Monday we had a contractionary reading for the officially surveyed (from China’s National Bureau of Statistics (NBS)) manufacturing PMI and a lower reading for the services PMI, and today’s Caixin manufacturing PMI dropped into contraction also. This weighed on the AUD, while NZD, EUR, GBP, CAD all fell against the US dollar also. I’ve been pointing out that weaker economic data from China does have a bright side, that it increases the prospect of more stimulus from China. Of course the stimulus that we have seen so far has been limited and piecemeal, and there are no signs that Chinese authorities have an appetite for more substantial stimulus so far. So maybe weak data is just weak data. Bad news is bad news, a new normal! Having said this both Hong Kong and mainland China stocks are positive for the session as I post. Not by a lot.
Still to come, at 0430 GMT and 0030 US Eastern time is the Reserve Bank of Australia decision for August. Analysts are more or less equally divided on an ‘on-hold’ vs. +25bp rate hike from the Bank. Market pricing is more decided, indicating an on hold is likely. There are previews in the bullet points above.
Asian equity markets:
Japan’s Nikkei 225 +0.7%
China’s Shanghai Composite +0.05%
Hong Kong’s Hang Seng +0.3%
South Korea’s KOSPI +1.2%
Australia’s S&P/ASX 200 +0.4%
