Strong USD causing issues for Asian currencies

Asia market update: Asian markets struggle for third straight day ahead of CB announcements; Strong USD causing issues for Asian currencies; CN LPR unchanged; Ford Canada strike averted for now; FOMC rate decision tonight.

General trend

- Asian markets in the red for a third day in a row, ahead of the FOMC meeting tonight and BOJ on Friday.

- In Asian currencies a continued strong USD saw Japan’s FX diplomat Kanda reiterate that excessive yen moves are not desirable - but with little market impact.

- China PBOC’s Head of Monetary Policy decried 'great' FX volatility in 2023 and wants the Yuan to be compared more to a basket of currencies.

- Thailand Baht traded at its lowest level since Nov 2022.

- While traders reported that the India Central Bank likely sold dollars to prevent Rupee from slipping to record lows.

- Japan 10-yr bond yields rise to 0.7300%, highest since 2014.

- Japan’s Aug Balance of Trade was worse than expected.

- US equity FUTs down slightly in Asian trading.

Looking ahead (Asian time zone)

- Tonight US FOMC rate decision.

- Thu NZ Q2 GDP.

- Thu evening UK BoE Rate Decision.

- Fri JP CPI (national) and JP BOJ Rate Decision.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,186.

- Australia Aug Westpac Leading Index M/M: -0.04% v 0.01% prior (revised higher from -0.03%).

- Australia ACCC: Gas supply outlook for Q1 2024 shows likely surplus.

- Australia sells A$800M v A$800M indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.2628% v 4.029% prior; bid-to-cover: 3.34x v 3.02x prior.

- S&P affirms Australia 'AAA/A-1+' rating; Outlook stable.

- Australia weather bureau declares El Nino event in Australia (overnight update).

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.6%.

- New Zealand Q2 Current Account (NZD): -4.2B v -4.6Be.

China/Hong Kong

- Hang Seng opens -0.3% at 17,939.

- Shanghai Composite opens -0.2% at 3,118.

- China monthly loan prime rate (LPR) setting: Unchanged.

- China exports zero germanium and gallium products in August - China Customs data.

- China PBOC Head of Monetary Policy Zou Lan: Global FX market has seen 'great' volatility in 2023; should focus more on yuan rate to a basket of currencies.

- NDRC Vice-Chairman Cong Liang: China's macroeconomic policies have been effective; Economic recovery will be treacherous; Those shorting China will surely be proved wrong.

- HUAWEI.CN Unit said to have started shipping new China-made surveillance chips in 2023.

- EU Commission Chief Von der Leyen: We see massive China EV subsidies - TV interview.

- China Yuan (CNY) to be supported by [recent] RRR cut and improving economy - PBOC-backed Financial News.

- China has room for further RRR rate cuts this year - Shanghai Securities front page article.

- Boeing (BA) Co. expects China to need 8,560 new commercial planes through 2042 - statement.

- Treasury Sec Yellen: Expect China to use its policy space to avoid a slowdown with major proportions.

- Yangtze Memory (YMTC) makes closer ties with domestic suppliers in China; the co. is seeking to make replacements for parts made by Lam Research.

- China launches appeal against wto ruling in dispute with US - Press (overnight update).

- (US) White House's Kirby: US wants to reopen military-to-military communication with China (overnight update).

- China's Jiangsu Province said to tighten rules on Local Govt Financial Vehicles (LGFV) offshore borrowing; The province has more than $17B of offshore LGFV debt outstanding, 10% of China's total LGFV offshore debt (overnight update).

- China Transport Ministry: Fully resuming international cruise ship transportation to and from Chinese ports (overnight update).
China Finance Ministry to sell CNH-denominated bonds via syndicate (overnight update).

- Macau Tourism Office: Aug visitor arrivals 3.22M +872% y/y, +16.7% m/m (overnight update).

- Hong Kong Aug Unemployment Rate: 2.8% v 2.8%e (overnight update).

- Russia Security Council's Patrushev: Discussed military cooperation with China's Foreign Min Wang Yi (overnight update).

- China PBOC sets Yuan reference rate: 7.1732 v 7.1733 prior.

- China PBOC Open Market Operation (OMO): Sells CNY205B in 7-day reverse repos v CNY208B prior; Sells CNY86B in 14-day reverse repos v CNY60B prior; Net injects CNY226B v Net injects CNY59B prior.

Japan

- Nikkei 225 opens +0.1% at 33,261.

- Japan Aug trade balance: -¥930.5B V -¥678.5BE.

- Japan's top FX diplomat Kanda: Excessive yen moves are not desirable; Watching FX moves with a high level of urgency.

- USD/JPY (JP) Former top Financial diplomat Nakao: "Fully possible" that intervention could happen again if Yen falls more.

- Bank of Japan (BOJ): Japan Household Assets: ¥2,115T v ¥2,043T prior - Quarterly Flow of Funds Report.

- Bank of Japan (BOJ) Gov Ueda to hold meeting with business executives in Osaka and news conference on Sept 25th (overnight update).

- Japan ruling LDP Senior official Seko: Economic stimulus of at least ¥15T needed, but ¥20T is desirable (overnight update).

- Bank of Japan (BOJ) announcement related to daily outright bond buying operation:

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

South Korea

- Kospi opens -0.1% at 2,556.

- South Korea Aug PPI Y/Y: +1.0% v -0.2% prior.

- Senior officials of South Korea, Japan, China to hold talks in Seoul on Sept 26 - South Korea Foreign Ministry (overnight update).

Other Asia

- Taiwan set to unveil island-made submarine by end-Sept.

- Thailand said to plan to borrow THB2.4T in the next fiscal year [FY24], +7.6% y/y.

- Thailand Baht (THB) trades at the lowest level since Nov 2022.

- Indonesia, Japan, aim to finish talks on trade pact by December - Indonesia Foreign Minister in statement.

- Indonesia Pres Jokowi sees Indonesia annual GDP growth at 6-7% in 2027-28; In no rush to join BRICS.

- Bank of Japan (BOJ) and Malaysia Central Bank (BNM) renew bilateral currency swap arrangement of up to $3B; - Effective Sept 18 (overnight update).

- Philippines Aug Overall Balance of Payments (BoP): -$0.0B v -$0.0B prior (overnight update).

- Bank of Japan (BOJ) and Malaysia Central Bank (BNM) renew bilateral currency swap arrangement of up to $3B; Effective Sept 18 (overnight update).

- USD/INR (IN) India Central Bank likely sold dollars to prevent Rupee from slipping to record low - traders.

North America

- Ford (F) Unifor (Canada union) reaches tentative agreement with ford.

- Ford (F) will not discuss specifics of the tentative agreement; Agreement is subject to ratification by Ford UNIFOR members.

- (US) Aug housing starts: 1.283M V 1.439ME (lowest since June 2020 and biggest miss of estimates since Feb 2019); building permits: 1.543M V 1.440ME.

Europe

- UK Chancellor of the Exchequer (Fin Min) Hunt: Says Britain's approach to clean energy technologies is less distortive - WSJ.

- Reportedly UK PM Sunak considers delaying ban on new petrol and diesel engine car sales from 2030 to 2035 - press.

- Germany to limit use of China components in 5G networks by 2026; relates to RAN and transport networks - financial press [update].

- Eurozone Aug final CPI Y/Y: 5.2% V 5.3%E; CPI CORE Y/Y: 5.3% V 5.3%E.

Levels as of 01:20 ET

- Nikkei 225, -0.6%, ASX 200 -0.6% , Hang Seng -0.7%; Shanghai Composite -0.3% ; Kospi -0.3%.

- Equity S&P500 Futures: -0.1%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 +0.1%.

- EUR 1.0675-1.0718 ; JPY 147.69-147.90 ; AUD 0.6448-0.6466 ; NZD 0.5932-0.5954.

- Gold -0.1% at $1,951/oz; Crude Oil -0.8% at $89.73/brl; Copper -0.2% at $3.7453/lb.