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Markets Update: APAC stocks lower, European equity futures flat ahead of central bank meetings; ASX 200 lower on commodity weakness, Nikkei 225 weakens after trade data, Hang Seng and Shanghai Comp subdued after PBoC rate decision.
Economic Calendar
Global Markets Roundup: 20 Sep 2023
Asian stocks were mostly lower on Wednesday, with risk appetite dampened ahead of a slew of central bank policy announcements this week. The Euro Stoxx 50 future was indicative of a contained open, after the cash market closed down 0.1% on Tuesday. The US dollar index (DXY) was steady above the 105 mark, while the euro (EUR/USD) and the pound (GBP/USD) sat below 1.07 and 1.24 respectively, with the latter eyeing upcoming CPI data.
The ASX 200 was dragged lower on Wednesday, with commodity-related sectors, including energy, leading the declines after oil prices eased back from year-to-date highs. Losses were cushioned by resilience in consumer stocks. The Nikkei 225 gradually weakened after the latest trade data showed Japanese exports and imports remained in contraction territory, albeit not as bad as feared.
The Hang Seng and Shanghai Composite conformed to the subdued mood after the People's Bank of China (PBoC) unsurprisingly maintained its benchmark 1-year and 5-year Loan Prime Rates at 3.45% and 4.20%, respectively. Meanwhile, Country Garden's dollar bondholders have been left in the dark regarding a coupon payment which was due on Monday, although the developer still has a 30-day grace period.
The US dollar index (DXY) traded uneventful above the 105.00 level on Wednesday, as participants remained on the sidelines ahead of the FOMC policy announcement.
The euro (EUR/USD) lacked firm direction after yesterday's return journey from the 1.0700 territory.
The pound (GBP/USD) traded sideways after a recent failure to sustain the 1.2400 status ahead of CPI data.
The US dollar against the Japanese yen (USD/JPY) price action was choppy although it sustained a firm footing at the 147.00 handle despite the renewed jawboning by Japan's top currency diplomat.
The AUD and NZD adhered to the rangebound mood across the region following the lack of surprises regarding the PBoC's LPRs. NZD/USD was only briefly supported by current account data.
PBoC official Zou warns against yuan volatility
PBoC official Zou warned against yuan volatility and said that more attention will be paid to changes in the yuan exchange rate against a basket of currencies. He added that there is a solid foundation to keep the yuan exchange rate basically stable and said they will resolutely correct one-sided pro-cyclical behaviour for the yuan exchange rate, while they will resolutely curb disruptions to market order and guard against exchange rate overshooting risks.
US Treasury Secretary Yellen comments on FX
US Treasury Secretary Yellen said that the Treasury generally understands the need to smooth out volatility in exchange rates but not to influence forex levels. She added that the view on any Japanese yen intervention would depend on the circumstances.
BoC Deputy Governor Kozicki comments on inflation
BoC Deputy Governor Kozicki said that recent volatility in headline inflation is not unusual but that the underlying trend shown by core measures was inconsistent with bringing inflation down to the 2% target. She added that they are prepared to hike if required.
Japan's top FX diplomat Kanda comments on yen
Japan's top FX diplomat Kanda said that excessive yen moves are not desirable and that they are watching FX with a high level of urgency. He added that they will take appropriate steps on FX as needed and are closely communicating with the US and overseas FX.
Bond markets subdued
10-year US Treasury (UST) futures were stuck near contract lows following yesterday's bout of selling ahead of the FOMC and after hot Canadian inflation data, while a strong 20-year auction failed to support prices.
Bund futures remained subdued after their recent slump beneath the 130.00 level.
10-year Japanese government bond (JGB) futures traded indecisively with headwinds from a rise in yields to their highest since 2014 despite the Bank of Japan's (BoJ) presence in the market for JPY 1.75tln of JGBs on top of its fixed-rate operations.
Commodities pullback Crude futures continued their pullback from a year-to-date peak, with WTI back below USD 94/bbl amid profit-taking and cautiousness ahead of upcoming risk events. Bullish private sector crude inventory data had very little impact on prices. Spot gold traded sideways amid an uneventful greenback heading into the FOMC. Copper futures lacked demand after recent declines and amid the subdued risk tone.
Looking ahead, the key events to watch on Wednesday include the UK CPI, US MBA, FOMC meeting, Fed Chair Powell's press conference, BCB policy announcement, BoC minutes, and speeches by ECB officials Panetta, Schnabel, and Elderson.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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