- China August Caixin/Market manufacturing PMI - flash 47.1, 6 ½-year low, 47.7 eyed, July final 47.8, domestic and export demand dwindling, almost all sub-indices off.
- PBOC fixes USD/CNY at 6.3864, 6.3915 yesterday.
- Asian capital controls are a real risk once again.
- Japan Fin Min Aso -China must shift more to market-based FX system, Japan to face tough decision on response if China FX intervention frequent, China slowdown impacting Japan stocks, eyeing China data/7% growth target.
- Econ Min Amari -China to take steps to prevent slowdown from becoming global problem, to help boost Japan CAPEX, Japanese firms boost wages.
- Less steel, fewer cars: makers scale back output as China econ cools.
- Japan August manufacturing PMI - flash 51.9, best since January, July final 51.2, new orders up on better demand, new export orders off on China woes, output too.
- Fed, seeking to leave zero behind, grapples with Catch-22.
- Foreign CB US debt holdings -$16.163 bln to $3.352 trln Aug 19 week, Treasury holdings -$15.588 bln to $3.013 trln, agencies -$208 mln to $295.280 bln.
- NY Fed - Swaps with foreign CBs total $132 mln Aug 19 week, all with ECB.
- UK pay deals rises stuck at 2%.
- Greek opposition party leader Meimarakis gets mandate to form govt.
- RBNZ delays start date for new home lending rules to November 1.
- NZ migration gains in July, short-term visitors at record levels.
- (0300 ET/0700 GMT) France August PMI manufacturing flash, 49.7 eyed; last 49.6.
- (0300 ET/0700 GMT) France august PMI services flash, 52.0 eyed; last 52.0.
- (0300 ET/0700 GMT) France August PMI composite flash, 52.0 eyed; last 51.5.
- (0330 ET/0730 GMT) Germany August PMI manufacturing flash, 51.7 eyed; last 51.8.
- (0330 ET/0730 GMT) Germany August PMI services flash, 53.9 eyed; last 53.8.
- (0330 ET/0730 GMT) Germany August PMI composite flash, 53.6 eyed; last 53.7.
- (0330 ET/0730 GMT) Sweden Q2 capacity utilization; last 88.9%, -0.2% q/q.
- (0400 ET/0800 GMT) Euro zone August PMI manufacturing flash, 52.2 eyed; last 52.4.
- (0400 ET/0800 GMT) Euro zone August PMI services flash, 54.0 eyed; last 54.0.
- (0400 ET/0800 GMT) Euro zone August PMI composite flash, 53.8 eyed; last 53.9.
- (0430 ET/0830 GMT) UK July PSNB, GBP1.9 bln eyed; last bln.
- (0430 ET/0830 GMT) GB July ex-banks, GBP1.3 bln eyed; last bln.
- (0430 ET/0830 GMT) UK July PSNCR; last bln.
- (0945 ET/1345 GMT) US August Markit manufacturing PMI flash, 54.0 eyed; last.
- (1000 ET/1400 GMT) Euro Zone August consumer confidence index - flash, -6.9 eyed; last -7.1.
Key Events Ahead
- N/A UK GBP2.0/0.5/2.0 bln 1/3/6-month treasury bill auctions.
- (0300 ET/0700 GMT) Riksbank Dep Gov Kerstin speech in Stockholm.
FX Recap
EUR/USD is supported around 1.1300 levels and currently trading at 1.1288 levels. It has made intraday high at 1.1291 and low at 1.1229 levels. The European currency also gained along as the US dollar remained undermined led by the recent FOMC minutes. On the data space, not much has been going on this week; the first important data will be released on Friday when flash PMIs from the euro zone and from individual euro zone countries are scheduled. While US flash manufacturing PMI report will fill in the otherwise data-quiet US macro calendar. Initial support is seen around at 1.1015 and resistance at 1.1347 levels.
USD/JPY is supported below 123.00 levels and posted a high of 123.49 levels. It has made intraday low at 122.81 and currently trading at 122.88 levels. Japan's factory sector continued to expand in August, according to an industry gauge, raising hopes that the economy will return to growth this quarter. Markit's Flash Manufacturing Purchasing Managers' Index (PMI) rose to 51.9 in August from last month's final reading of 51.2, where a figure above 50 signals an expansion in activity, while a reading below 50 indicates a contraction. Japan's manufacturing sector has benefited hugely from a rapid weakening in the Japanese yen over the last few years, making domestic production more competitive and increasing firms' profitability. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.
GBP/USD is supported below $1.5700 levels. It made an intraday high at 1.5699 and low at 1.5681 levels. Pair is currently trading at 1.5695 levels. Sterling dropped against the dollar and euro on Thursday after data showed UK retail sales rose by less-than-expected in July. Retail sales volumes inched up 0.1 percent on the month against forecasts of a 0.4 percent increase. Total factory orders picked up pace in August while exports to European and overseas markets continue to struggle on the back of a strong sterling, a new survey showed on Thursday. The overall balance of orders within the UK manufacturing sector improved in August to -1%, up from -10% a month before, and comfortably above market estimates, the Confederation of British Industries (CBI) figures showed on Thursday. Today is data thin calendar for UK. Market will eye on US flash manufacturing PMI data for the further directions. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported above 0.6600 levels and trading at 0.6623 levels and made intraday low at 0.6607 and high at 0.6630 levels. A weak consumer confidence index reading for August and a soft rise in job ads last month did little to weigh down the so-called kiwi on Thursday. Earlier on Thursday ANZ's Consumer Confidence index for August showed a reading of 109.8, down four points from July, and hitting a three-year low. Looking ahead, we have a busy NA session with a series of key releases from Canada to dominate. The Canadian Consumer Price Index (CPI) is projected to advance to 1.3% in July over the past year, following a quickening of pace to 1% in the previous month, according to consensus. While retail trade is estimated to edge up just 0.2% during June, following a surge of 1% in May. While US flash manufacturing PMI report will fill in the otherwise data-quiet US macro calendar. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported around 0.7300 levels and trading at 0.7305 levels. It has made intraday high at 0.7340 levels and low at 0.7286 levels. The Australian dollar fell against its US peer on Friday after a Chinese manufacturing index came in weaker than forecast, prompting fresh concerns about the strength of the world's second-largest economy and Australia's largest trading partner. The AUD/USD fell more than 60 pips to an intraday low of $0.7288 on Friday after the report was released, sliding from $0.7336 beforehand. The implications for China's trading partners, including Australia who is heavily reliant on Chinese demand, could be extensive. Australia's export sector is already under massive pressure with commodity prices trading sharply lower than a year ago. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Japan's benchmark Nikkei 225 index slumped 1.79% to 19,675.04 points within the first hour of trade on Friday, while Tokyo's broader Topix gauge dived 2.12% to 1,589.41 points.
Hong Kong's benchmark Hang Seng index fell 1.71% to 22,368.64 points at the opening bell, and mainland China's benchmark Shanghai Composite lost 1.48% to trade at 3,609.96 points at the same time.
Korea's benchmark Kospi index toppled over 1.89% to 1,878.32 points on Friday morning in Seoul.
The benchmark Australian S&P/ASX 200 index plunged 1.16% to 5,227.20 points in Sydney, facing a second day of sharp losses amid risk-off sentiment.
New Zealand's benchmark S&P/NZX 50 index slipped 0.12% lower to 5,735.71 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes down 1.44 pct at 5,212.60 points.
Tokyo's Nikkei average closes down 2.98 pct at 19,435.83.
Treasury Recap
BOJ offers to lend Y604.7 bln of JGBs on spot basis through 8/24 as a secondary source of JGBs.
Thai 37.6 bln baht, 14-day central bank bond average accepted yield 1.40653 pct.
Commodity Recap
Spot gold hits highest level in more than a month on Friday after weak factory growth in China fanned worries that the world's second largest economy may be slowing sharply, sparking safe-haven demand for the metal. Activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, a private survey showed. Spot gold rose 0.6 percent to $1,159.16 an ounce by 0152 GMT, having struck the highest since July 13 at $1,160.80.
Crude futures slipped on Friday, heading for huge weekly losses, as commodity traders are still facing the same problems - a global supply glut, worries over Iran returning to the market and China's slowing economy. WTI futures slipped 1.14% to $40.85 per barrel, while futures for Brent gave up 0.97% to trade at $46.17 per barrel.
