Asian markets and currencies tremble while others lay still

RMB continued its appreciation against the Dollar – reaching a low not seen since mid-March. Last week, China’s trade surplus rose to record levels in July, with exports surprisingly growing 14.5% year on year. The trade data suggests that the recovering international demand may offset the weak domestic consumption helping China achieve its 7.5% annual growth target growth rate. The fall of USDCNH may continue for a while as the China Central Bank has now declared it’ll quit the market operation. We have to remember though, a high growth rate in exports is hard to sustain and the appreciation of RMB may not remain for too long.

Dollar/Yen bounced slightly from the 102 integer support level, signalling that its fall may cease with the Japan Q2 GDP release is coming soon. The forecast for this GDP growth tomorrow morning is a 6.8% contraction, taking into consideration the significant impact from the recently implemented consumption tax rate raise. Investors are now expecting that the BOJ will have to introduce further monetary stimulus in the near future. These expectations will certainly weaken the Yen. Nevertheless, traders should still bear in mind the risks from geopolitical tensions.

Asian stock markets rebounded on Monday lead by the Japanese market. The Nikkei Stock Average surged 2.38% but has yet to recover from Monday’s loss. The Shanghai Composite bounced 1.38% to 2224. The Australian ASX 200 rose 0.4% to 5457. In European stock markets, the FTSE closed 1% higher, the German DAX rocketed 1.9%, and the French CAC Index surged 1.2%. U.S. stocks closed in a lightly traded session. The Dows gained 0.1% to 16570. The S&P 500 advanced 0.28% to 1937, while the Nasdaq Composite Index was up 0.69% to 4401.

On the data front, Australia NAB Business Confidence will be out at 11:30 AEST. Another data that may attract traders’ interest is the ZEW Economic Sentiment of Germany and Eurozone.

In the rest of this week we will see several data releases for GDP and Inflation from major developed nations. These economic data will provide the market with more clues on each nation’s economic current conditions and potential policies.