Forex news for Asia trading Wednesday 27 May 2020
- No. 2 Chinese mobile phone maker Oppo accelerates efforts to develop its own chips
- AUD and NZD: "a question of when, not if, depreciation resumes" (& forecasts)
- Forecast for Australian economic growth in Q1 remains for contraction
- M5.0 earthquake in Greece, south of Crete
- China Industrial Profits for April -4.3% y/y (prior -34.9%)
- Australia Q1 Construction Work done -1.0% q/q (expected -1.5%)
- PBOC sets USD/ CNY reference rate for today at 7.1092 (vs. yesterday at 7.1293)
- FX option expiries for Wednesday May 27 at the 10am NY cut
- Travel between Australia and New Zealand could be as early as July
- US Senator says if China passes HK bill then no option but for US to impose sanctions
- Hong Kong’s legislature surrounded by police ahead of expected large rally, protests
- PBOC says China aims to have its cryptocurrency ready soon
- US president Trump "massive corruption and fraud" tweeting
- Japan press reports on government to spend 206bn yen on coronavirus vaccine
- RBNZ Gov Orr says significant part of economic challenge still ahead
- AUD/USD 'key resistance' ahead
- National Bank of Canada says base case is unemployment rate to remain elevated for up to 4 years
- US Navy says 2 Russian jets unsafely intercepted a US Navy patrol aircraft
- More from BoC Gov Poloz - negative rates needed in extreme conditions
- Twitter have placed a warning on Trump tweets over misleading, fraudulent claims
- Trump warned of sanctions on China, but no further info until the end of the week
- NZD "remains at the mercy of global risk sentiment near term"
- Trump vague about potential sanctions on China, says will have more by end of the week
- BOC's Poloz: Have more tools to deliver more support if needed
- RBNZ says financial system in a solid position
- Trade ideas thread - Wednesday 27 May 2020
Protests in Hong Kong flared again with a general strike called for the day adding to people taking to the streets. The HK legislature is debating a law that would punish those disrespecting China's national anthem today. This seems to be about the only catalyst for movement in the currencies of note, with some flows into the US dollar. We did get vague comments from Trump in the US afternoon about sanctions coming on China, he said he might have more detail at the end of the week. EUR/USD is down 30 or so points while cables is also a touch lower.
AUD and NZD held in relatively well but have succumbed so some weakness alongside.
Construction data from Australia for Q1 showed continued weakness for activity in the sector with a decline of 1% q/q. Public infrastructure spending continues to be strong but despite this public construction fell.
USD/CNH was a big mover, moving above highs from late March. CNY was set a touch weaker, but this has been superseded by the weaker offshore yuan. The PBOC injected 120bn yuan in 7 day reverse repos today saying the additional funds were in response to government bond issuance and ensured ample liquidity remained. Yesterday the Bank injected just 10bn yuan, the first action in open market operations for 37 days. Also from China today, the Ministry of Transport said fixed-asset #investment in transportation projects increased 18.2% y/y to 300bn yuan in April. Data from China today indicated lower industrial profits in April although the fall was nowehere near the massive slump in March at peak shutdown.
USD/JPY is little net changed on the session after a bit of a swing in a 107.35/60 (or thereabouts) range.
