Good morning
The safe-havens
were back in demand as the sentiment on the Asian markets remained soured,
despite stabilizing China stock markets (currently holding small gains across
the board). While lower oil prices and persistent Chinese economic slowdown
worries continued to weigh on the commodities-currencies. The People's Bank of
China continued to act on its intention to calm the yuan market today,
squeezing offshore yuan shorts and keeping a steady fix, confounding those
looking for further Yuan devaluation. Overnight Yuan HIBOR (Hong Kong Interbank
Offered Rate - Offshore yuan borrowing rates) has jumped to a new record high
of 66.82% from 13.4%.
The Japanese
Yen has again benefited with USD/JPY despite a brief move towards 118.00 it has
since reversed and is pushing towards 117.30 as I type. The Nikkei has been
trading heavy as Japan return to work from their extended weekend, currently
down -2.70% on the day.
Oil has been
hit hard again as Asia sends Brent to a 12 year low and sees Hedge Funds
starting to exit the commodity. Morgan Stanley warn that a strong US Dollar may
send Brent down to as low as $20 a barrel.
The day ahead
brings risk events for the British Pound. We have MoM Manufacturing and
industrial production at 09:30 GMT followed by BOE’s Carney speaking this
afternoon, although whether he can add any gems is to be seen. BoJ Governor
Kuroda is also speaking at 10:30 GMT. But as ever this year the main focus will
be all things China and the subsequent fallout.
Good luck.
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