Freefall in Europe and Other Major News You Need to Know
Asia markets were a mixed bag with some indices higher on the back of oil advances and after the Bank of England's rate cut and easing announcement, although a looming NFP has kept gains in check. Nikkei 225 (-0.1%) is marginally lower with fluctuations in JPY driving price-action, while ASX 200 (+0.7%) was boosted as commodities strength supported energy and mining names. Hang Seng (+1.3%) outperformed to break above 22,000, while the Shanghai Comp (-0.1%) lagged after a net weekly liquidity drain from the Peoples Bank of China. 10yr JGBs traded with minor losses as demand for the paper was dampened amid gains across riskier assets, while the Bank of Japan’s presence in the market for 1.25trl of government debt helped stem losses.
The Peoples Bank Of China injected CNY 90bln via 7-day reverse repos for a net-weekly drain of CNY 161.5bln vs Prev. weekly injection of CNY 325bln. Also the Peoples Bank of China set CNY mid-point at 6.6406 (Prev. 6.6444).
The Recruitment and Employment Confederation said UK labour market entered a freefall in July with UK July placements index at 45.4 vs. Prev. 49.3 in June. Fitch said yesterday’s Bank of England’s actions are a proactive response and is a cushion not an offset to growth shock.
In the FX markets the USD/JPY saw choppy trade with prices range-bound, as participants await today’s key-risk US jobs data. Elsewhere, commodity-linked currencies remained firm after oil continued its advances during US hours, with AUD/USD then printing fresh 3-week highs after the RBA’s SOMP in which the central bank refrained from providing forward guidance.
RBA Statement on Monetary Policy did not give any forward guidance but stated that its policy easing will help foster growth. RBA stated that GDP growth looks to have moderated in Q2, and that the drag on GDP from declining mining investment seems to have peaked. RBA also forecast CPI to remain around 1.5% at year-end and increase to between 1.5-2.5% in end-2017, while it kept GDP forecasts for 2016 and 2017 unchanged at between 2.5-3.5% for both years.
Oil prices have seen mild profit-taking overnight with WTI crude futures pulling back from yesterday’s highs to below USD 42/bbl. Gold (+0.1%) traded flat to hold on to the gains seen following the Bank of England easing announcement, while copper also saw subdued price-action and failed to recover from its recent declines.
Atlanta Fed GDP Now model forecasts Q3 at 3.7% vs. Prev 3.6%. (Newswires)
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