- China state banks buying shares to prop up battered stockmarket
- Goldman Sachs: China may end Covid Zero policy before April (earlier than widely expected)
- RBNZ's Silk says recession forecast shows it'd be shallow and technical
- BoJ Governor Kuroda says tightening labour market will help drive up wages ahead
- PBOC sets USD/ CNY reference rate for today at 7.1617 (vs. estimate at 7.1695)
- China protesters waving blank pages - so China bans sale the of white paper (seriously)
- Goldman Sachs is "skeptical that the Euro can durably rally"
- Australian data - October retail sales fall 0.2% m/m (vs. expected +0.5%)
- China's PBOC is expected to set the USD/CNY reference rate at 7.1695 – Reuters estimate
- Oil - US gives Chevron limited license to pump oil in Venezuela
- Uk energy price crisis - government to launch new billion-pound home insulation program
- RBA Gov. Lowe says demand is too strong relative to supply
- ICYMI - US latest crackdown on the Chinese tech, bans Huawei, ZTE equipment sales
- Iraq to increase oil export capacity, to add 1mn to 1.5mn barrels/day by 2025
- G7/EU Oil Price Cap talks will resume on Monday. $65 per barrel limit is a sticking point.
- Economic calendar in Asia - a light one - Reserve Bank of Australia Governor Lowe speaking
- COVID - Protests erupt across China: "Step down, Xi Jinping! Step down, Communist Party!"
- Newsquawk Week Ahead November 28th- December 2nd
- Monday morning open levels - indicative forex rates - 28 November 2022
- The forex week ahead.A look at the risk and bias defining levels for week starting Nov 28
There were widespread protests in China on the weekend over Chinese Communist Party heavy-handed lockdowns, censorship, and mismanagement of the COVID crisis. Movement in financial markets on the session can be summarised as flows into haven assets and out of risk.
Coronavirus cases in Beijing almost doubled over the weekend and gained right across the country. The government’s harsh restrictive response continued, triggering widespread protests. In the very early Asian hours the US dollar gapped higher pretty much across the board. As time rolled on and other markets opened the same sentiment was translated into prices. US equity indexes on Globex moved lower and US treasuries were bid (therefore yields fell).
Oil prices dropped (the lower China demand story due to stricter lockdown combined with a boost in supply story out Venezuela – re Chevron, see bullets above). WTI futures fell to the lowest levels since December of 2021.
USD/JPY was a laggard in the early dollar move. There were some haven flows into the yen. As the session progressed we had remarks reported from Bank of Japan Governor Kuroda and Japanese Prime Minister Kishida. Kuroda referred to wage gains as being supportive of more stable levels of inflation (more in the bullets above) which gave the yen a boost. USD/JPY fell more than a big figure from its early highs. Its since retraced some of that drop.
As I post EUR, AUD, NZD, GBP and others are all lower still against the USD. The 'gap' down from Friday has not been filled. '
From Australia today we had testimony from Reserve Bank of Australia Governor Lowe. The RBA recently dialled back its rate hike magnitude from a series of +50bp rate hikes to now two +25bp rate hikes in succession (October and November). Lowe gave no indication the Bank is actively considering beefing hikes back to +50bp. The consensus in the market is for a +25bp hike at the December (6th) meeting with the Bank content to keep a slower hiking pace in place while they watch and wait and assess how rate hikes so far will impact the economy. Interestingly, Lowe offered an apology to Australians who took out loans based on guidance from the RBA that interest rates were unlikely to rise until 2024. You may recall this forward guidance? At ForexLive we warned, scornfully, it was untrustworthy given the RBA's woeful record on forecasting:
It was negligent of the RBA to make such a horrible forecast. Market participants know full well to treat this sort of rubbish from the RBA with contempt, but it is very unfair to disburse such 'guidance' to unsuspecting members of the public.
Also from Australia today we had retail sales data for October. This came in at -0.2% m/m, the first negative since December of 2021. The RBA rate hikes are aimed at weighing on consumer demand. The data for retail sales show they may very well be doing so.
In Chinese stock markets, losses were steep. Both HK and mainland shares traded lower. There was intervention from state banks to prope prices up, which has assisted in recovering some of the declines (see bullets above for more on state bank stock buys).
USD/CNH gapped higher but state intervention has seen a good deal of the rise retraced (5 min bars):
