Asia Summary
Asian equity markets opened slightly higher before retreating for the second day and currencies returned to more muted trade as expectations of military action on North Korea fell. Analysts note that the current class of FX traders is not showing the same instinct to head for USD in moments of crisis like prior generations. This is reinforcing USD’s structural bearishness. They note that the yen, euro and even the yuan are moving into the safe haven flow seat. The onshore yuan trades near its highest level in 15-months amid a weaker dollar. PBOC again skipped OMO for the 4th consecutive day and set the yuan reference rate stronger for the 7th consecutive day. The Australian dollar rose to 0.7986 after Q2 trade data showed net exports will add 0.3% to Q2 GDP, which will be released tomorrow. Japan 10-yr JGB auction had a lowest price of 100.83 compared to the 100.86 expected by the markets. As expected RBA left rates on hold, statement mostly unchanged from prior meeting. AUD fell ~0.1% on the news.
North Korea was seen moving ICBM missile towards the west coast for a possible launch before Saturday. There is a high chance North Korea will fire ICBM missile before Sept. 9th, its national founding day. Saw reports that there was dollar selling to smooth the won on Monday. Today, the won was relatively unchanged as markets return to smoother operations.
Key economic data
(NZ) New Zealand Q2 Volume of All Buildings Q/Q: -0.5% v +1.6%e (2nd consecutive decline, 1st time since 2011)
(HK) Hong Kong Aug PMI Services: 49.7 v 51.3 prior (1st contraction reading in 5-months)
(PH) PHILIPPINES AUG CPI M/M: 0.3% V 0.2%E; Y/Y: 3.1% V 3.0%E; CPI CORE Y/Y: 3.0% V 2.2%E
(AU) AUSTRALIA Q2 BOP CURRENT ACCOUNT BALANCE -$9.6B V -A$7.5BE; NET EXPORTS OF GDP: 0.30 V 0.00E
(CN) CHINA AUG CAIXIN PMI SERVICES: 52.7 V 51.5 PRIOR, PMI COMPOSITE:52.4 V 51.9 PRIOR
Speakers and Press
China/Hong Kong
(CN) Researcher says China should keep size of FX reserves – Chinese Press
(CN) China President Xi: Economic downward risks and uncertainties are rising; Calls for opposing protectionism
Korea
(KR) G7 Statement on North Korea: Condemn nuclear test; NK must abandon all nuclear missile program
(KR) South Korea President Moon: halting oil shipments to North Korea should be considered closely by UN
(KR) South Korea to designate Oct 2nd as a temporary holiday, in an effort to boost domestic consumption
(KR) North Korea seen moving ICBM for a possible launch before Saturday – Asia Business Daily
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.6%, Hang Seng +0.2%; Shanghai Composite +0.2%, ASX200 -0.2%, Kospi -0.2%
Equity Futures: S&P500 -0.3%; Nasdaq100 -0.2%, Dax 0.0%, FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1911-1.1890; JPY 109.84-109.21; AUD 0.7986-0.7942; NZD 0.7177-0.7159
Dec Gold +0.8% at $1,341/oz; Oct Crude Oil +0.2% at $47.39/brl; Sept Copper +0.2% at $3.16/lb
(CN) PBoC skips OMO operations v skips prior; Drains net CNY70B v CNY140B prior (4th consecutive skip)
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5370 V 6.5668 PRIOR (7th consecutive stronger setting)
(TH) Thailand sells THB105B combined 3-month, 6-month and 1-yr bonds
(JP) Japan MoF sells ¥2.299T in 10-yr 0.1% (prior 0.1%) JGBs; Avg yield: 0.011% v 0.073% prior; bid to cover: 3.95x v 4.21x prior
Equities notable movers
Hong Kong/China
4.HK Submits listing application related to planned spin off of Wharf Real Estate Investment Co; +3.3%
2202.HK Reports Aug property contracted sales CNY37.04B; YTD CNY349.8B v CNY312.7B prior; +4%
Australia/New Zealand
RAP.AU Reaffirms commitment for a follow-up SMARTCOUGH-C Study; -15%, attributed to consolidation after moving +60% over the last several days
SXY.AU Awarded 58 square kilometre Surat Basin coal seam gas acreage by Queensland government; +4%
