Forex news for Asia trading Friday 25 September 2020
- More on the inflows to China expected from the inclusion of CBGs into the FTSE Russel WGBI
- China's inclusion in the FTSE Russel Bond Index expected to attract USD120bn inflows
- China PMIs due next week - improvement expected
- Australian preliminary trade data for August. Exports -2% m/m, imports -7% m/m.
- WSJ says RBA will not cut the cash rate at the October meeting
- PBOC sets USD/ CNY reference rate for today at 6.8121 (vs. yesterday at )
- FX option expiries for Friday September 25 at the 10am NY cut
- China anti-dumping investigation on imports of some chloride products from the US
- CBA is forecasting the RBA on hold at the next meeting
- Australia has loosened its lending laws
- Japan PPI Services (Aug): 1.0% y/y (exp 1.2%; prior 1.2%)
- Palantir (data-mining-software specialist) expected to valued near USD 22bn
- UK vehicle production down 44% y/y in August
- Magnitude 5.0 Gulf of California earthquake
- UK jobs data ahead tipped to improve further
- UK data - GfK Consumer Confidence for September -25 (expected -27, prior -17)
- Novavax has begun a late-stage trial of Covid-19 vaccine candidate
- Japan press says a corporate tax cut for small, medium enterprises is under consideration
- Lower USD/SGD remains the path of least resistance
- FTSE Russell will add China government bonds to benchmark WGBI index next year
- ICYMI - Harley-Davidson is pulling out of India, ending sales, manufacturing operations
- Citi say there is scope for the USD to move even higher in the months ahead (sell the Kiwi $)
- AUD/USD end of year target still 0.75 despite near term lower
- Trade ideas thread - Friday 25 September 2020
- The US is preparing to take Sudan off state-sponsors of terrorism list
There was not a lot to move major FX from news nor data flow during the session. The most impact came from news that China government bonds (CGBs) look set to be included in the FTSE Russell flagship World Government Bond Index (WGBI). The index is made up of mostly developed market bonds and is a major step for CGBs. Chinese government bonds are already included in two other major global indexes, JPMorgan's and Bloomberg's. A couple of points that have been made but may be lost in the celebration:
- the decision is subject to confirmation in March 2021
- if approved then the bonds will be phased into the index from October 2021
(see bullets above for more)
Offshore yuan was trading at the time of the announcement, it added to its gains against the USD.
Otherwise major forex rates traded in limited ranges only and as I update there is little net change. USD/JPY did manage to trade above 105.50 (same as its US high give or take) for a time. Late last week the word was that 105 was the new line in the sand we'd never see again as 'real' rates in Japan were attractive (I posted on my doubts over this a couple of times) and that level did indeed hold into this week. However the move back above 105 came from mid-week and the higher range has consolidated again today, albeit without adding much.
