September 18, 2024 at 02:53AM The People’s Bank of China will set Loan Prime Rates (LPRs) on Friday September 20: these benchmark lending rates remained unchanged in August one-year loan prime rate stayed at 3.35% the five-year rate was maintained at 3.85% In July China’s central bank confirmed several reforms to its interest rate framework, shifting from using the previous LPR precursor to shorter-term seven-day reverse repurchase agreements. Previously, banks were instructed to set their LPR based on the interest rates from the PBOC’s medium-term lending facility. The PBOC will conduct the MLF loan rollover on September 25. This article was written by Eamonn Sheridan at www.forexlive.com.
Australian August Monthly CPI preview – Westpac expect 2.7% y/y for the monthly read
September 18, 2024 at 02:25AM This is via Westpac’s preview of the inflation data due from Australia on Wendesday 25 September at 11.30 am Sydney time 0130 GMT, 2130 US Eastern time In brief: WPAC near-cast for the August Monthly CPI Indicator is –0.2%mth/2.7%yr. For the September quarter CPI our near-cast is 0.3%qtr/2.9%yr. …. Our near-cast for the Trimmed Mean is 0.7%qtr/3.5%yr. Driving prices down in August is the further extension of the household energy rebates (particularly for, but not limited to, NSW and Vic) plus falling auto fuel, holiday travel and garments. Pushing prices up in August are rents, dwellings, food, alcohol & tobacco, household contents & services and finance & insurance. Being the second month of the quarter, August provides an update on the services surveyed in the mid-month of each quarter. preliminary August near-cast for market services ex volatile is 0.3%mth/4.6%yr. Note that second line of the points above. The quarter CPI forecast is 2.9%, which is still under the 3% top of the target band. The RBA will be breathing a little easier if that is the case. Note also, though, the quarterly CPI is not due until October 30. It’s the quarterly CPI that will be of most focus for the RBA. The monthly inflation data is not the ‘official’ rate, and its not as complete as the quarterly data. The current cash and CPI rates from the front page of the RBA website – there is scope for the cash rate to to be trimmed if the CPI falls. IMO anyway. This article was written by Eamonn Sheridan at www.forexlive.com.
PBOC sets USD/ CNY reference rate for today at 7.0870 (vs. estimate at 7.0828)
September 18, 2024 at 02:15AM The People’s Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead. USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate. CNH is the offshore yuan. USD /CNH has no restrictions on its trading range. A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC. Mainland China is back from holidays on Monday and Tuesday today. The previous close was 7.0958. The 7.0870 reference rate today is the strongest for CNy since January this year. In open market operations (OMOs): PBOC injects 568bn via 7-day RR, sets rate at 1.7% 487.5 bn yuan reverse repo and 591 bn yuan MLF loans expire today net 510.3 bn liquidity drained from market This article was written by Eamonn Sheridan at www.forexlive.com.
Australia leading index in August shows still very slow growth ahead
September 18, 2024 at 02:10AM Australia Westpac Leading Index for August 2024 -0.05% m/m prior –0.03% Westpac note, in summary: The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, declined from +0.04% in July to -0.27% in August. Commodity price fall a significant drag on momentum. Other components stable rather than weak. Signal points to activity remaining subdued through first half of 2025. – The index signalling a potential slowdown in economic activity is troubling news. Australian economic growth is already extremely sluggish. We have jobs and inflation data due in the next week from Australia. Early CPI previews I am seeing show expectations of the y/y rate moving down towards the centre of the RBA 2 – 3% target bad. Rate cuts maye may be on the horizon. This article was written by Eamonn Sheridan at www.forexlive.com.
El Erian cites ‘The Economist’ – Fed rate cuts “may disappoint “
September 18, 2024 at 01:45AM The Federal Open Market Committee (FOMC) meets today, Wednesday, September 18, 2024. at 1800 GMT, 1400 US Eastern time El Erain with the tweet suggesting pricing for the Fed cuts are too extreme. Earlier: Most analysts expect a 25bp interest rate cut from the Federal Reserve today A 50bp Federal Reserve rate cut coming today? History says ‘No’. This article was written by Eamonn Sheridan at www.forexlive.com.
Japan August data shows a big miss for both exports and imports – recap
September 18, 2024 at 01:32AM The Bank of Japan meet this week, announcement due on Friday September 20. The Bank is not expected to hike rates again: Bank of Japan meeting this week – preview (no rate change expected) Ueda and his colleagues will be eyeing the data showing slowing export growth: Japan August exports +5.6% y/y (expected +10.0%) & imports +2.3% y/y (expected +16.6%) In summary: exports rose for a ninth straight month, but at a much slower-than-expected pace in August shipment volumes fell 2.7% y/y, the seventh consecutive month of declines indicating slowing global demand is impacting a previously bright light for Japan’s economy imports showed a huge miss also, weaker import performance is often a sign of an economy slowing down This article was written by Eamonn Sheridan at www.forexlive.com.
PBOC is expected to set the USD/CNY reference rate at 7.0828 Reuters estimate
September 18, 2024 at 01:18AM People’s Bank of China USD/CNY reference rate is due around 0115 GMT. The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%. How the process works: Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading. The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives. Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value. Offshore yuan update: This article was written by Eamonn Sheridan at www.forexlive.com.
Asian markets holidays reminder – Hong Kong is closed today
September 18, 2024 at 12:21AM It’s a Hong Kong public holiday for the day following the Chinese Mid-Autumn Festival Hong Kong Market is closed Both Northbound and Southbound Stock Connect trading is closed — China / Hong Kong Stock Connect is a mutual market access program that allows investors in mainland China and Hong Kong to trade and invest in each other’s stock markets. This initiative aims to facilitate cross-border trading, broadening market access for international investors and providing more liquidity to both markets. Here’s a breakdown: Two Main Programs: Shanghai-Hong Kong Stock Connect (launched in 2014): Connects the Shanghai Stock Exchange (SSE) with the Hong Kong Stock Exchange (HKEX). Shenzhen-Hong Kong Stock Connect (launched in 2016): Connects the Shenzhen Stock Exchange (SZSE) with HKEX. Northbound Trading: Allows international and Hong Kong investors to buy eligible shares listed on the Shanghai and Shenzhen exchanges through the HKEX. Southbound Trading: Enables mainland Chinese investors to trade eligible shares listed on the Hong Kong Stock Exchange through the SSE or SZSE. Quota Systems: The program initially had daily and aggregate quotas for trading to ensure controlled market access, though the aggregate quota was later removed in 2018. Daily quotas still limit the amount of money that can flow in and out each day. In summary: Provides foreign investors access to China’s A-share market. Allows mainland Chinese investors to diversify their portfolio with Hong Kong-listed stocks. Promotes market integration and opens up new opportunities for both retail and institutional investors. This article was written by Eamonn Sheridan at www.forexlive.com.
JP Morgan CEO Dimon says FOMC rate cut today is not going to be earth-shattering.
September 18, 2024 at 12:03AM JPMorgan CEO Jamie Dimon was speaking at a conference on Tuesday. I didn’t hear a specific 25 or 50 from him, but he did say that the cut is “not going to be earth-shattering.” I guess that’s a tip for 25? Although 50 ain’t gonna shatter the earth either come to think of it. More on the cut: “it’s a minor thing” “People overly focus on, ‘are we going to have a soft landing, a hard landing? Honestly, most of us have been through all that stuff, it doesn’t matter as much.” Dimon says his big concerns right now are eopolitical issues Ukraine the Middle East US relationship with China This article was written by Eamonn Sheridan at www.forexlive.com.
New Zealand data – Current account deficit for Q2 comes in larger than expected
September 17, 2024 at 11:54PM NZD/USD not showing much response. Currently up a few wee tics around 0.6189. The data focus for the week is Q2 GDP due Thursday local NZ time. The current account represents the most comprehensive gauge of a nation’s international financial interactions. It encapsulates not just the exchange of goods and services, but also earnings from foreign investments and payments made on investments from abroad within NZ. In addition, it covers transfers like overseas aid and remittances. — More on the “current account” refers to a component of a country’s balance of payments that measures the flow of goods, services, investment income, and unilateral transfers (such as remittances and foreign aid) between the country and the rest of the world. The current account is divided into several categories: Trade Balance: The value of exported goods minus the value of imported goods. Net Exports/Imports of Services: Such as tourism, software services, etc. Net Investment Income: Includes income from assets held overseas, such as dividends and interest, minus similar payments made to foreign investors who own assets in the country. Unilateral Transfers: Transfers that don’t involve a quid pro quo, such as remittances, foreign aid, grants, etc. A positive current account balance indicates that a country is exporting more than it is importing, effectively lending to the rest of the world. Conversely, a negative current account balance means that a country is importing more than it is exporting and is thus borrowing from other countries. The current account, together with the capital and financial accounts, make up a country’s balance of payments, providing a comprehensive view of a country’s economic transactions with the rest of the world. This article was written by Eamonn Sheridan at www.forexlive.com.