All eyes on US Fed rate decision

General trend and developments

- Euro overnight plowed through to a 4-year high and Gold crossed $3,700 for the first time on general dollar weakness as FOMC kicks off its two day meeting, expected to cut rates by 25bps tomorrow (Wed). Dollar was not even helped by hot Retail Sales nor GDPNow raising its Q3 growth estimates up to 3.4%.

- Korea’s Kospi finally corrected -1% today, after yesterday ending higher for an 11th straight session – the longest daily winning streak since Sept 2019 and with the index having more than doubled since early April. Samsung was down -2%, and Hynix, (after a huge 30% gain in just the past 30 days) lost -3.5%.

- Mixed equities elsewhere in Asia, with Hang Seng outperforming +1.4% on potential TikTok deal and general AI optimism (Baidu +14%), while the Nikkei opened down after a record 45K was hit, recovered but then dipped into the red again as the session continued.

- On the backdrop of yet more poor economic data for August (released Monday) overnight the CCP issued a series of further measures to boost service consumption, as the prior measures such as trade-in goods programs wind down. The new measures center on promotional activities for consumption in areas such as internet, culture, tourism, leisure, education, medicine, sporting events and building a long-term care insurance system. Separately, the govt will also support more R&D spend by companies.

- Japan’s August trade deficit only half what was estimated, but a big drop again in exports to the US, down -13% over the prior month.

- Singapore also hit hard by US tariffs, with August exports to the US dropping by -28.8% y/y, following a -42.8% fall in July.

- New Zealand’s Current Account deficit narrowed significantly for Q2 amid the so-called Temu effect, where the accuracy of national economic data has been questioned by Stats NZ due to the large volume of low-value international packages from China impacting the accuracy of import figures.

- No lack of demand for longer-term Japanese govt debt today as this month’s 20-year JGB auction saw its highest bid-to-cover since May 2020 (4.0X).

- China’s largest chipmaker SMIC is reportedly testing a DUV lithography machine made by a Chinese startup. Would be China's first advanced tool for AI chipmaking, potentially competing with Dutch lithography machine-maker ASML. (Reportedly testing 28nm and then using patterning techniques to produce 7nm, and potentially up to 5nm if successful).

- Pres Trump and wife Melania arrived in the UK on Tues eve for their State visit, greeted at Windsor Castle by the Prince and Princess of Wales. Wed morning sees a formal welcome by King Charles III and Queen Camilla with a royal salute fired at Windsor and Tower of London and an unprecedented joint flyover by UK and US F-35 fighter jets.

- US equity FUTs flat during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Wed Sept 17th (Tue eve UK Aug CPI, ID BI Rate Decision,Wed night US Aug prelim Building Permits, CA BOC Rate Decision, US FOMC Rate Decision).

- Thu Sept 18th NZ Q2 GDP, AU Aug jobs, (Thu eve BOE Rate Decision, FR protests / strikes against fiscal plans).

- Fri Sept 19th NZ Aug Trade Balance, JP Aug CPI, JP BOJ Rate Decision, (UK Aug Retail Sales).

Holidays in Asia this week

- Mon Sept 15th Japan.

- Tue Sept 16th Malaysia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,842.

- Australia Aug Westpac Leading Index M/M: -0.04% v +0.13% prior.

- Australia sells A$1.2B v A$1.2B indicated in 4.25% Dec 2035 bonds: Avg Yield: 4.2384% v 4.2776% prior; bid-to-cover: 2.16x v 3.24 x prior.

- New Zealand Q2 Current Account Balance (NZD): -0.97B v -2.7Be.

- New Zealand Aug ANZ Consumer Confidence: 90.9 v 91.2 prior.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.8% v -4.3% prior [overnight update].

- RBA Dep Gov Hauser: Pension funds will have to expand the use of foreign exchange hedging [overnight update}.

China/Hong Kong

- Hang Seng opens +0.4% at 26,554; Shanghai Composite opens -0.2% at 3,854.

- SMIC: Reportedly testing a DUV lithography machine by startup Yuliangsheng of Shanghai (trials for China's first advanced tools for AI chipmaking) – FT.

- Hong Kong CEO Lee annual policy address: Affirms 2025 economic growth projected at 2-3%.

- WFC banker Mao Chenyue, who had been barred from leaving China since July, is being allowed to return to the US - WAPO.

- China PBOC expected to ensure ample liquidity during Sept; cites analysts - Chinese Press.

- China State Media: China will review and approve matters related to TikTok tech export and IP in accordance with the law.

- (HK) Companies are using new ways including share swaps to obtain dual listings in China and HK; one example includes Zhejiang Expressway Co. and Zhejiang Oceanking Development Co. - China Securities Journal.

- Bytedance: White House: Will further extend delay on enforcement of TikTok's US unit sale to Dec 16th [from Sept 17th] [overnight update].

- Reportedly TikTok US unit would be 80% held by consortium comprising Oracle, Andreessen Horowitz (A16Z) and SIlver Lake; Users would be asked to switch to new app – WSJ [overnight update].

- China Premier Li Qiang: Will support firms' increase in R&D spending - comments at visit to aerospace industrial facility in Gansu province (CCTV).

- China issues measures on boosting service consumption (ahead of Trump Xi call on Friday).

- Hong Kong Aug Unemployment Rate: 3.7% v 3.8%e [overnight update].

- China PBOC sets Yuan reference rate: 7.1013 v 7.1027 prior.

- China PBOC Open Market Operation (OMO): Injects CNY419B in 7-day reverse repos; Net injects CNY115B v injects CNY40B prior.

Japan

- Nikkei 225 opens -0.4% at 44,752.

- JAPAN AUG TRADE BALANCE: -¥242.5B V -¥512.6BE; Adjusted Trade Balance: -¥150.1B v -¥341.3Be.

- JAPAN SELLS ¥800B VS. ¥800B INDICATED IN 20-YEAR JGB BONDS; AVG YIELD: 2.6540% V 2.5810% PRIOR; BID-TO-COVER: 4.00X V 3.09X PRIOR [highest bid-to-cover since May 2020, vs 12-month average of 3.21x].

- LDP senior leader Takaichi arranges press conf for LDP leadership race on Sept 19th.

- Japan and EU should jointly develop rare earth resources in Greenland - Nikkei citing EU Official.

- Japan PM Ishiba arranging for US visit for UN General Assembly - press.

Korea

- Kospi opens -0.5% at 3,433.

- South Korea Fin Min Koo: To decide dividend income tax after discussion with parliament.

- South Korea Trade Min Yeo confirms to have met with USTR Greer in the US for trade talks - press.

- South Korea Foreign Min Cho: Understand that Pres Xi of China may attend APEC Summit in South Korea (Oct 31-Nov 1) - Korean press.

- Bank of Korea (BOK) Aug Minutes; Sees further policy rate easing needs to be made factoring in household debt growth, trade talks with US.

Other Asia

- Taiwan Econ Ministry said to add China's Inspur, Nettrix and Suma to export control list - press.

- Singapore Aug Non-Oil Domestic Exports Y/Y: -11.3% v 0.8%e.

- (IN) India PM Modi: Like US Pres Trump, I'm committed to taking US-India global relationship to new heights; Support Trump's initiatives towards peaceful resolution of Ukraine war - X post.

North America

- (US) USTR Greer: China rare earth exports have bounced back significantly; Won't comment on potential US buyers of TikTok - Fox Business.

- (CA) Canada Aug Annualized Housing Starts: 245.8K v 280.0Ke.

- (US) AUG advance Retail Sales M/M: 0.6% V 0.2%E; Retail Sales (EX-AUTO) M/M: 0.7% V 0.4%E; Retail Sales (ex-auto/gas): 0.7% v 0.4%e; (control group): 0.7% v 0.4%e.

- (CA) CANADA AUG CPI M/M: -0.1% V 0.0%E; Y/Y: 1.9% V 2.0%E.

- (US) Aug import price index M/M: 0.3% V -0.2%E; Y/Y: 0.0% V 0.0%E.

- (US) Sept New York Fed Services Business Activity: -19.4 v -5.8e.

- (US) Atlanta Fed GDPNow: Raises Q3 GDP from 3.1% to 3.4%.

- (US) Govt said to be in discussions to establish $5B fund for minerals deals - press.

- (US) Trump admin to consider new national security tariffs on imported auto parts - press.

- (US) House of Reps to vote on a 7-week CR govt funding bill on Friday (9/19) - Punchbowl.

- (US) Pres Trump: Fed should be independent; Will seek to refine UK trade deal a little bit.

- (US) Sept NAHB housing market index: 32 V 33E.

- (US) Treasury $13B 20-year bond reopening draws 4.613% v 4.935% prior, bid-to-cover 2.74 v 2.79 prior and 2.63 over last 8 auctions.

- (US) Trump admin to consider new national security tariffs on imported auto parts - press.

- (US) Reportedly House GOP leaders flipped some holdout votes on Friday's upcoming CR vote – Politico.

Europe

- (RU) Russia could reportedly be forced to start cutting oil production following attacks on Baltic Sea ports - press.

- Microsoft will invest over $30B in the UK throughout 2025-2028, including $15B to build out cloud and AI infrastructure.

- (EU) European Commission Pres Von der Leyen: Had a good call with Trump today; Spoke about putting more pressure on Russia - X post.

- (PL) Poland Aug CPI Core M/M: 0.2% v 0.1%e; Y/Y: 3.2% v 3.1%e.

- (UK) UK and US to announce closer co-operation on cryptocurrencies - FT.

Levels as of 01:20 ET

- Nikkei 225 -0.3%, ASX 200 -0.8%, Hang Seng +1.5%; Shanghai Composite +0.4%; Kospi -1.3%.

- Equity S&P500 Futures flat; Nasdaq100 flat; DAX +0.3%; FTSE100 flat.

- EUR 1.1851-1.1873; JPY 146.21-146.71; AUD 0.6673-0.6690; NZD 0.5975-5991.

- Gold -0.3% at $3,715/oz; BTC +0.5% at $116,650; Crude Oil -0.2% at $64.41/bbl; Copper -0.8% at $4.6635/lb.