Broad dollar weakness reigns

TradeTheNews.com Asia Mid-Session Market Update: Broad dollar weakness reigns; Aussie import/export price index falls

Asia Summary

- Equities markets in the region opened generally higher absorbing the Fed rate decision in stride. Earnings season is now in full swing around the globe with Nintendo in Japan putting out strong results after the close yesterday, in Korea Samsung Electronics reported final Q2 results a bit higher than prelim. The dollar saw a broad sell off over the session, with the biggest moves coming about mid-day. EUR/USD rose to 1.1777, AUD/USD 0.8066 and USD/JPY tested 110.78. Korea’s won gained 1% against the USD, while copper held steady around a 2-year high in London as markets process China’s scrap import ban.

- The PBOC shifted its OMO to using just 7-days, dropping its use of 14-day reverse repos, operations were small with a total net injection of CNY20B. Chinese press said that China is exploring a multi-tiered reserve requirement system in order to address liquidity strains. Offshore yuan nearly reached a 2-month high. Markets were little impacted by economic data in the session.

Key economic data

- (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 9.25%; AS EXPECTED

- (KR) SOUTH KOREA Q2 PRELIM GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.7%E

- (CN) CHINA JUN SWIFT GLOBAL PAYMENTS (CNY): 1.98% V 1.6% PRIOR

- (JP) Japan investors net bought ¥1.18T in foreign bonds v bought ¥947B in prior week; Foreign investors net bought ¥292B in Japan stocks v bought ¥377B in prior week

- (AU) AUSTRALIA Q2 IMPORT PRICE INDEX Q/Q: -0.1% V 0.7%E; EXPORT PRICE INDEX Q/Q: -5.7% V -5.5%E

- (CN) CHINA JUN INDUSTRIAL PROFITS Y/Y: 19.1% V 16.7% PRIOR

Speakers and Press

China

- (CN) Chinese Academy of Social Sciences (CASS) and former PBOC Adviser Yu: capital outflows are more likely to be a larger source of systemic risk in China than high debt - China press

- (CN) China Ministry of Finance (MOFCOM): China to keep increasing imports from US

- (CN) Moody's revises outlook on China banking system to stable from negative

Korea

- (KR) Intelligence authorities see Kim Jong Un's motorcade near missile site, seen as a sign launch is imminent at missile site in northwestern North Korea

- (KR) Bank of Korea (BOK) OfficialChung: consumption and investment led to Q2 GDP growth; see private consumption to continue improving

Japan

- (JP) Japan Govt recommends minimum wage increase of 3% or ¥25 to ¥848/hr (same rate as last year)

- (JP) Luxury goods brands such as Chanel and Cartier said to raise prices in Japan in Aug due to FX rate shifts - Nikkei

Other

- (TW) Taiwan and US to focus on medical sector in trade talks - Taiwan press

Asian Equity Indices/Futures (00:00ET)

- Nikkei +0.2%, Hang Seng +0.5%, Shanghai Composite -0.3%, ASX200 +0.3%, Kospi +0.2%

- Equity Futures: S&P500 +0.2%; Nasdaq +0.5%, Dax +0.1%, FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

 EUR 1.1776-1.1721; JPY 111.22-110.78; AUD 0.8065-0.7992; NZD 0.7558-0.7517

- Aug Gold +1.2% at 1,264/oz; Sept Crude Oil -0.1% at $48.69/brl; Sept Copper +0.2% at $2.88/lb

- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.7307 V 6.7529 PRIOR

- (NZ) New Zealand sells NZ$150M in 3.5% 2033 bonds; avg yield 3.2996%

- (CN) China PBOC OMO injects CNYB in 7 day reverse repos v CNY130B in 7 and 14 day prior

- (JP) Japan MoF sells ¥400.1B v ¥400B indicated in 2-yr 0.1% (prior 0.1%) JGBs; Avg yield: -0.1150% v -0.103% prior; bid to cover: 5.35x v 6.79x prior

Equities notable movers

Hong Kong/China

- Sands China, 1928.HK Reports Q2 Net profit $326M v $237M y/y, Rev $1.82B v $1.48B y/y; -0.3%

- Dongfang Electric ,1072.HK Guides H1 Net CNY370M; +7.6%

Japan

- Nintendo, 7974.JP Reports Q1 Net ¥21.3B v ¥7.6Be; Op ¥16.2B v ¥10.6Be; Rev ¥154.1B v ¥62.0B y/y; +7.1%

Korea

- Samsung Electronics,005930.KR Reports final Q2 (KRW) Net 10.8T v 9.8Te; Op 14.07T v 14.0T prelim; Rev 61.0T v 60.0T prelim; to buy back KRW1.67T of shares; flat

Other

-United Microelectronics, UMC Reports Q2 net (NT$) 2.10B v 1.27Be, Rev 37.5B v 37.0B y/y; -8.1%

US markets on close: Dow +0.5%, S&P500 flat, Nasdaq +0.2%, Russell -0.6%