Yen extends drop despite comments out of JP, USD trades generally firmer

Asia Market Update: Yen extends drop despite comments out of JP; USD trades generally firmer; UST yields extend rise; Big miss for CN trade balance.

General trend

- Asian currencies [CNH, KRW, MYR, PHP, SGD, JPY] drop amid central bank uncertainty, higher UST yields; Weak CN trade data was also not helpful.

- PBOC continues to weaken the Yuan.

- South Korea gov’t to hold FX meeting.

- MYR trades at the lowest level since early 1998.

- Little reaction seen from AU GDP data.

- BOJ stepped up bond buying amid higher JGB yields.

- GBP extends drop.

- Crude Oil FUTs trade at multi-month lows.

- China soybean imports at the lowest level since 2014.

- Equity markets trade generally lower amid higher bond yields and central bank concerns/uncertainty.

- Australian ex-dividends [Amcor, Austal, Brambles, Medibank, Viva Energy].

- RBA Gov Lowe due to comment on Thurs (Sept 8th) [Address by Philip Lowe, Governor, to Anika Foundation – Inflation and the Monetary Policy Framework – Sydney LIVE on 8 September 2022, 1.05 pm AEST].

- Bank of Canada expected to hike rates.

- Various US Fed officials also due to speak [including Brainard].

- China may release FX reserves data.

- Taiwan Semi may report monthly sales on Thurs.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened -0.1%.

- (AU) Australia Q2 GDP Q/Q: 0.9% V 0.9%E; Y/Y: 3.6% V 3.4%E.

- (AU) Australia Aug AIG Services Index: 53.3 v 51.7 prior.

- (AU) Australia Treasurer Chalmers: Cannot rely on high commodity prices persisting, still substantial cause to be confident in the economy.

Japan

- Nikkei 225 opened -0.3%.

- (JP) Japan former Top Currency Diplomat Watanabe: No need for Govt to respond if USDJPY hits 145, more important to look at if levels are sustained enough to hurt margins; Don't think BOJ will raise interest rates to stem JPY weakness.

- (JP) Japanese Govt websites likely hit by cyberattack on Sept 6th - Press.

- (JP) Japan Govt said to consider ¥50K handouts for low income families - Press.

- (JP) Japan Aug FX Reserves $1.29T v $1.32T prior.

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Increases 5-10 year purchase amounts by ¥50B.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Japan Chief Cabinet Sec Matsuno: Will decide on easing border controls as appropriate; believe relaxation of border control measures could be advantage with weak JPY; Ready to take appropriate actions on FX market if necessary.

- (JP) Japan Fin Min Suzuki: Recent JPY moves are rather rapid and one sided; Strong interest if recent FX moves will continue.

Korea

- Kospi opened -0.6%.

- (KR) South Korea July Current Account (BOP): $1.1B v $5.6B prior; Balance of Goods (BOP): -$1.2B v +$3.6B prior.

- (KR) South Korea Finance Ministry to hold meeting today (Wed) on FX with Bankers - Yonhap.

- (KR) South Korea Fin Min: CPI to reach peak in Sept or Oct; Cannot comment on specific FX Rate; KRW movement in line with most currencies vs USD.

China/Hong Kong

- Hang Seng opened -1.5%; Shanghai Composite opened -0.4%.

- (CN) China Sec Times: Investors should not overly emphasis the USD/CNY crossing the 7 level; China News says yuan stability intact, rebound possible.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B in 7-day reverse repos v CNY2.0B prior; Net CNY0B v Net CNY0B prior.

- (CN) China PBOC sets Yuan reference rate: 6.9160 v 6.9096 prior.

- (CN) China Ministry of Finance (MOF) sells 1-month and 2-month bills, and 1-year and 5-year bonds.

- (CN) China July trade balance (CNY-denominated): 535.9B V 661.9BE.

- (CN) China  Aug trade balance: $79.4B V $92.7BE.

North America

- (US) US President Biden and UK PM Truss discussed cooperation on Ukraine, China Challenges, preventing Iran nuclear weapon.

- (US) Fed's Barkin (non voter, Hawk): Reiterates rates must stay high until inflation eases; Bias in general is moving more quickly - FT.

Europe

- (US) White House spokesperson Kirby: So far no indication of China violating Russia sanctions.

- (EU) Reportedly Hungary threatens to block the renewal of the EU sanctioned individuals and entities from Russia if three Russian oligarchs are not delisted; EU ambassadors to discuss tomorrow, Sept 7th - press.

- (NO) Said that Norway is open to talking to EU about a Gas Price Cap - FT.

Levels as of 01:20 ET

- Nikkei 225, -0.7%, ASX 200 -1.4% , Hang Seng -1.6%; Shanghai Composite +0.2% ; Kospi -1.5%.

- Equity S&P500 Futures: -0.2%; Nasdaq100 -0.1%, Dax -0.9%; FTSE100 -0.8%.

- EUR 0.9912-0.9877 ; JPY 144.38-142.71 ; AUD 0.6738-0.6699 ;NZD 0.6053-0.5996.

- Gold -0.5% at $1,705/oz; Crude Oil -1.8% at $85.28/brl; Copper -1.4% at $3.4093/lb.