ING: “PBOC surprises markets with an off-schedule 20bp cut to the MLF”Horrible images out of Jasper, Canada – fire danger in Alberta now is extremeUSD/JPY implied volatility surges to its highest since the first week of MayJapan’s Nikkei index is more than 10% down from its recent highPeople’s Bank of China reduces 1 year Medium-term Lending Facility (MLF) rate to 2.3%PBOC sets USD/ CNY central rate at 7.1321 (vs. estimate at 7.2706)Goldman Sachs expect CTAs to dump USD7bn of stocks if market keeps fallingChina Construction Bank lowers rates alsoChinese bank (one of the world’s largest banks) cuts time deposit ratesUS President Biden speaking – time to ‘pass the torch’Japan Services PPI (June) +3% y/y (expected +2.6%, prior +2.5%)South Korean GDP contracted in Q2 – eyes on the Bank of Korea for a rate cutBlackRock forecasts the Bank of Japan not to hike rates at the July 30 / 31 meetingJapan’s Kanda says finance leaders discussed China’s excessive capacityJapan finance minister Suzuki spoke from Brazil – didn’t comment on FX levelsChina’s slowing economy – liquidity trapICYMI: Former NY Fed President Dudley says FOMC needs to cut next week, September too lateDavid Rosenberg says more Bank of Canada rate cuts are needed, “still too high “Forexlive Americas FX news wrap 24 Jul:Watch out below! Broad indices worst day since 2022UBS bullish commodities – maintain year-end Brent target at USD 87 – bullish gold alsoVIX has closed at its highest since April 19Big Wins and Misses: IBM and Chipotle Beat Expectations, Ford Falls ShortTrade ideas thread – Thursday, 25 July, insightful charts, technical analysis, ideas
The
weakness on Wall Street that continued on Wednesday weighed on
regional equities here today. Despite the rate cuts from the People’s
Bank of China earlier this week Chinese equities fell. The People’s
Bank of China are keen to avoid further losses for stocks. The Bank announced another rate cut today. The Bank left the
Medium-term Lending Facility (MLF) rate unchanged last week at 2.5%,
but in a double surprise move they cut the rate today.
Surprise 1 was
an MLF today, the PBOC have been doing these regularly on the 1th of
each month. Today the Bank injected 200bn yuan for one year at a
reduced rate of 2.3%. The second surprise was the 20bp cut, after only 10bp cuts to the repo and LPRs on Monday.
Several
major Chinese commercial banks, such as the Industrial and Commercial Bank of
China (ICBC), Agricultural Bank of China (AgBank), Bank of Canada (BOC),
and others, announced 10 – 20 bps deposit rate cuts.
Otherwise
news
and data flow was fairly light.
That
didn’t stop significant (for Asia) FX moves. AUD, NZD and CAD were
notable losers. GBP fell also but EUR has mainly tracked sideways. Gold fell under USD2370. BTC/USD is
USD/JPY
was slammed 150 points lower again. As I write its under 152.50. The
carry trade continues to be wound back, with deleveraging triggered
by this strengthening yen.
We got higher (wholesale) inflation data from Japan today. Service prices among businesses rose the most in over three decades, If this translates to consumer level inflation its another reason the BoJ has to tighten. The pass through won’t be evident immediately of course. The BoJ meet next week
This article was written by Eamonn Sheridan at www.forexlive.com.
