The risk sentiment across Asia remained buoyed amid a rebound in the local equities and Treasury yields and US equity futures, despite the Chinese central bank (PBOC) having fixed the USD/CNY central rate above the key 7.00 level for the first time since 2008.
As with the other risk-beta assets, the Antipodeans also extended the recent bounce, but the further upside lost legs amid a slide in the Chinese iron-ore futures and gold prices. The yellow metal corrected lower from over six-year tops of $ 1510.10. The Aussie remained capped by 0.6783, Wednesday’s high, uninspired by upbeat Chinese trade data. Meanwhile, the Kiwi retreated from near 0.6490 region. The Cable traded firmer near 1.2170 region, resilient so far to the mounting Hard Brexit risks.
However, the Loonie fell back below the 1.33 handle amid a sharp rally in oil prices, as markets expect a potential action by Saudi and other producers to stem the recent declines. The Yen, on the other hand, managed to retain control, with USD/JPY’s upside attempts capped by 106.30 level.
Main Topics in Asia
RBA’s Bullock: Financial health of businesses looks sound, no threat to banks
Saudis are discussing options with producers to halt oil’s slide – Bloomberg
US agencies barred from buying Huawei equipment – Financial Times
Japan’s Aso: We are closely watching impact of US-China conflict
RBNZ Assistant Governor Hawkesby has said “We are watching inflation expectations closely
PBOC sets Yuan reference rate at 7.0039
USD/CNH: Rejected at 7.10 even though PBOC announced weakest daily Yuan fix since 2008
China considering new measures to stabilize trade – China Press
Japan: Will consider expanding the strict examination if improper use of exports to S. Korea is found, KRW unexpectedly rises
China’s July trade data (CNY): Surplus beats estimates, Exports show a solid surge, Aussie keeps highs
China’s July trade data (USD): Upbeat Trade Surplus, Exports unexpectedly jump
China’s Trade Surplus with the US shrinks in July – China Customs
Asian stocks: Bulls cheer China data despite looming trade/political uncertainty
Key Focus Ahead
Markets sentiment in the session ahead is expected to be mainly driven by the increased risks of a trade and currency war, especially with a data-sparse calendar on both sides of Atlantic. The focus remains on the European Central Bank (ECB) economic bulletin due at 0800 GMT, which usually follows its July meeting.
In the NA session, the US weekly Jobless Claims data will be released at 1230 GMT alongside the Canadian New Housing Price Index release while the US Wholesale Inventories will drop in at 1400 GMT. Markets look forward to Friday’s key Japanese GDP and Chinese CPI data for fresh trading impetus.
EUR/USD: Indecisive market, USD vulnerable to dovish Fed expectations
Back-to-back Doji candles on the daily chart indicate the EUR/USD market has turned indecisive. The rising Fed easing expectations make the US Dollar vulnerable. EUR/USD needs to break above 1.1250 to revive the corrective rally.
GBP/USD: Higher lows on daily sticks favor bulls amid Brexit risks
GBP/USD trades firmer above 1.2150, portraying higher low formation on daily sticks, as the summer recess in the UK parliament tames no-deal Brexit noises. Focus shifts to the UK GDP report for fresh direction.
Forget the VIX the FIX is the markets new fear gauge
The Fix is the number one game in town and will continue to dictate the pace of play for risk assets over the near term. Nothing else matters at this stage.
Gold technical analysis: All eyes on 23.6% retracement target
Bulls can eye the 127.2% Fibo target up at 1,560, but first, a pullback is on the making. Trade war and fears of a global slowdown keeping the bid alive in gold.
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