HomeContributorsFundamental AnalysisUS Treasury Does Not Name Any Currency Manipulators

US Treasury Does Not Name Any Currency Manipulators

General Trend:

  • Asian equity markets trade mixed: Shanghai and Hong Kong lag
  • Shanghai Composite Property Sub-index declines over 3% amid higher rates
  • HK property developer Country Garden [2007.HK] declines over 4%, follows press report regarding sales pressure on workers
  • Russian aluminum producer Rusal extends recent declines
  • Japan electrical appliances seller Yamada Denki drops over 7% after cutting outlook
  • Japanese politics remain in the headlines
  • US equity futures rise: Syria fallout seen as limited, according to press reports
  • WTI and Brent Crude Futures decline over 0.5%
  • US Treasury Dept. declines to name China as currency manipulator
  • PBoC injects liquidity amid weak M2 data, raises rate on 14-day reverse repo (in line with rate hike on 7-day maturity)
  • Hong Kong money market rates rise after HKMA acted last week to defend currency peg
  • China Q1 GDP data and Reserve Bank of Australia (RBA) minutes due for release on Tuesday’s session

Headlines/Economic Data

Japan

  • Nikkei 225 opened +0.3%; closed +0.2%
  • TOPIX Retail Trade index +1%; Securities -0.8%
  • (JP) In meeting on Sunday, Japan Foreign Minister Kono and China State Councillor/Foreign Min Wang agreed to improve ties – financial press
  • (JP) Japan PM Abe Cabinet approval rating at 31% , according to Asahi poll; Support for Abe declined to 26.7% in Nippon TV poll (lowest since taking office in 2012)
  • (JP) Former Japan PM Koizumi said current PM Abe may resign in June – financial press
  • (JP) Japan companies raised wages by avg 2.41% in 2018 (largest increase in 20-yrs) – Nikkei

Korea

  • Kospi opened +0.5%
  • South Korea not labeled currency manipulator by US Treasury
  • (KR) Bank of Korea (BoK) sells KRW600B in 6-month monetary stabilization bonds (MSBs): yield 1.69%
  • (KR) South Korea Fin Min Kim: Will seek the right way to disclose currency market intervention details; Job weakness not due to minimum wage
  • (KR) South Korea sells KRW1.15T in 10-year bonds v KRW1.15T indicated, avg yield 2.62% (updated)

China/Hong Kong

  • Hang Seng opened +0.1%, Shanghai Composite -0.2%
  • Hang Seng Property/Construction index -2.4%, Materials -2.4%, Industrial Goods -2%, Financials -1.9%
  • Gaming names weaker after China announced it would support horse racing and sports lotteries in Hainan
  • (CN) Analysts see China Q1 y/y GDP at 6.8% – financial press
  • (CN) China halted review of more than 110 companies in China applying for IPO – US financial press
  • (CN) China Foreign Min Wang: Talks with Japan important sign of China-Japan ties strengthening
  • (CN) China PBoC Open Market Operation (OMO): Injects combined CNY150B in 7-day and 14-day reverse repos v skips prior; Net: injects CNY130B v CNY0B drain prior; raises rate for 14-day to 2.70% from 2.65%
  • (CN) China PBoC sets yuan reference rate at 6.2884 v 6.2898 prior
  • (CN) China to allow foreign investors to trade Dalian iron ore futures as of Friday, May 4th – financial press
  • (HK) Hong Kong HK$ overnight HIBOR rises to 0.18411% from 0.10857%; 1-month rises to 0.85464% from 0.84625%
  • (HK) Hong Kong Fin Sec Chan: Weakness in the HK$ is not too much of a concern, as the govt has prepared early and has enough money to deal with the capital outflow; HKMA has intervened in the FX market four times as of Sunday – SCMP
  • (CN) China Securities Daily Op Ed sees PBOC to continue to use targeted RRR
  • (CN) China State Researcher: See China Q1 GDP at 6.9% – Chinese press

Australia/New Zealand

  • ASX 200 opened +0.2%
  • ASX 20 Utilities index +1.4%, Energy +0.8%, Resources +0.6%; Financials -0.2%
  • (NZ) New Zealand Mar Performance Service Index: 58.8 v 55.3 prior
  • (NZ) New Zealand Mar Food Prices m/m: +1.0% v -0.5% prior
  • Blue Sky, BLA.AU Cuts FY18 underlying Net A$20-25M (prior A$34-36M); Fee-earning AUM A$4.0-4.235N (prior A$4.25-4.75B); Launches independent review to enhance disclosures
  • (AU) RBA Dep Gov Debelle: There is strong evidence that anchoring of inflation expectations has been enhanced over the past 25 years

North America

  • (SY) US, UK and France launched missile strikes against Syrian chemical weapons facilities; Pentagon says the strikes successfully hit every target; Trump tweets “Mission Accomplished!”
  • (RU) Russian Dep Foreign Minister Ryabkov: supports counter-sanctions in response to U.S. sanctions – Russian press
  • (RU) Russia President Putin said further attacks by the West on Syria would bring chaos to global affairs, if such actions [Western strikes in Syria] committed in violation of the U.N. Charter continue, then it will inevitably lead to chaos in international relations.
  • (US) Treasury Semi-annual Currency Report: Declines to name China as currency manipulator
  • (US) On Saturday, US Vice President Pence said it was possible that a NAFTA deal would be reached in the next several weeks – financial press
  • (US) White House economic adviser Kudlow: Optimistic US and China can avoid a broader trade fight; confirms Trump wants to look at entering the TPP-11, but that it was too soon to say how long that process would take – press

Europe

  • (ES) Moody’ raises Spain sovereign rating by 1 notch to Baa1 from Baa2; outlook Stable
  • (UK) Apr Rightmove House Prices m/m: 0.4% v 1.5% prior; y/y: 1.6% v 2.1% prior
  • (UK) Q1 Visa Spending y/y: -1.4% v -1.3% prior (largest fall since Q4 2012)
  • (GE) Germany Interior Minister rejected the 6% wage increase demanded by the Verdi public sector union – German Press
  • (CH) SNB’s Jordan: its not the right time to change Swiss monetary policy; changes in monetary policy in other countries could give the SNB more room to maneuver
  • Whitbread [WTB.UK]: Elliott Advisors believes it is now Whitbread’s largest holder with more than 5% stake
  • WPP [WPP.UK]: CEO Sorrell steps down, effective immediately; Names current Chairman Roberto Quarta as Executive Chairman until new CEO is named; Mark Read and Andrew Scott named as joint COOs

Levels as of 02:00ET

  • Hang Seng -1.8%; Shanghai Composite -1.8%; Kospi +0.1%; ASX 200 +0.2%
  • Equity Futures: S&P500 +0.3%; Nasdaq100 +0.3%, Dax +0.3%; FTSE100 +0.1%
  • EUR 1.2342-1.2325; JPY 107.61-107.13; AUD 0.7783-0.7760;NZD 0.7363-0.7347
  • Jun Gold +0.0% at $1,348/oz; May Crude Oil -0.9%at $66.81/brl; May Copper +0.1% at $3.07/lb
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