GBP declines as traders digest move by the BOE

Asia Market Update: GBP declines as traders digest move by the BOE; CNH, AUD and NZD also drop; German CPI in focus; CN PMIs due on Fri [Official and Caixin Manufacturing].

General trend

- Another quiet session seen for USD/JPY [remains below ¥145].

- Terrible NZ bond auction?

- Quarter-end in focus.

- Vietnam Q3 GDP missed ests.

- Equity markets rise after BOE move.

- Japanese equity gains capped by ex-dividends.

- Hang Seng pares gain [Mainland Properties Index extends decline, CIFI Holdings remains in focus].

- Commodity-sensitive indices outperform in Australia.

- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.

- South Korea Vice Fin Min will conduct KRW2.0T in Korean bond buybacks on Sept 30th (Fri)

- Reserve Bank of New Zealand (RBNZ) Gov Orr to speak on Sept 30th

Headlines/economic data

Australia/New Zealand

- ASX 200 opened +0.4%

- (NZ) New Zealand Sept Business Confidence: -36.7 v -47.8 prior

- (AU) Australia Resources Min: Reached agreement with east coast on LNG

- (AU) Australia July CPI Y/Y: 7.0%; (AU) Australia  Aug CPI Y/Y: 6.8% V 7.0% prior

- (AU) Australia Q2 Job Vacancies Q/Q: -2.1% v 14.4% prior

- (NZ) New Zealand sells N$400M v NZ$400M indicated in 2027, 2032, and 2041 bonds.

Japan

- Nikkei 225 opened +0.4%.

- (JP) Japan Investors Net Buying of Foreign Bonds: -¥1.10T v -¥140.7B prior; Foreign Net Buying of Japan Stocks: -¥1.18T v -¥609.7B prior.

- (JP) Tokyo is not expected to immediately participate in the nationwide travel program, needs 1 month to prepare for the program - Japanese press.

- (JP) Japan PM Kishida said to have promised steps on easing cost of power - Nikkei.

- (JP) Japan Bank for International Cooperation (JBIC) to offer low interest loans to procure LNG.

- (JP) Japan MOF sells ¥2.8T v ¥2.8T indicated in 0.005% 2-year JGBs: Avg Yield: -0.0460% v -0.0830% prior; bid-to-cover: 4.78x v 3.61x prior.

- (JP) Japan Fin Min Suzuki: Coronavirus has made Asia debt situation difficult; Enhancing debt transparency is important.

- (JP) Japan Chief Cabinet Sec Matsuno: Will consider additional steps on power costs.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

Korea

- Kospi opened +1.4%.

- (KR) South Korea President Yoon: Govt will appropriately deal with various economic shocks.

- (KR) South Korea Oct Business Manufacturing Survey: 75 v 82 prior; Non-Manufacturing Survey: 81 v 82 prior.

- (KR) South Korea, US, and Japan to hold military drills on Friday, Sept 30th.

China/Hong Kong

- Hang Seng opened +1.9%; Shanghai Composite opened +0.7%.

- (CN) China PBoC official: Warns against one-way bets on CNY currency (Yuan) on either side; Stresses that currency has solid foundation to stay basically stable; Asks banks to safeguard authority of CNY-fixing; Top priority to keep forex market stable, calls for stepping guidance in Forex market - press [from Sept 28th].

- (CN) China Securities Times Commentary encourages CNY traders to stay rational amid the swings in the USD/CNY.

- (CN) China Vice Foreign Min Ma: Commitment to true multilateralism remains unchanged.

- (CN) China State Planner (NDRC) Criticizes We Media for spreading rumor of Hog Price Increases; Vows to continue limiting fabrication of Hog Price increases.

- (CN) China MOF said to plan Q4 bond issuance of ~CNY2.5T (~$347B) - financial press.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY105B in 7-day reverse repos v CNY133B prior; Sells CNY77B in 14-day reverse repos v CNY67B prior; Net inject CNY180B v Net inject CNY198B prior.

- (CN) China PBOC sets Yuan reference rate: 7.1102 v 7.1107 prior.

- (CN) China PBOC tested digital currency use to settle trades with various partners [Hong Kong, Thailand and UAE] - SCMP.

- (CN) Power Management IC (PMIC) suppliers in China said to cut prices; notes declining demand for consumer electronics in China - Digitimes.

Other

- (TW) Taiwan Central Bank Gov Yang: FX management measures sufficient to maintain market if there are large FX outflows; Central bank capable of coping with capital flows; FX outflows due to fed rate hikes.

- (TH) Thailand Central Bank Gov Sethaput: Open to special rate meeting if necessary; Ready to adjust tightening pace if needed; Rate hikes to be gradual; Approach is gradual and measured.

North America

- (US) Over 2.0M Floridians are without power after Hurricane hits Florida.

- (US) Fed's Evans (non-voter): We need to address inflation; Expect to be at the peak Fed funds rate around March 2023.

- (US) NY Fed takes $2.37T in RRP program at 3.05%; 101 participating and accepted counterparties (record high dollar amount).

- (US) Fed's Bowman (voter): We should review Fed approach to defining banking markets.

- (US) Aug pending home sales M/M: -2.0% V -1.5%E; Y/Y: -22.5% V -24.5%E.

- (US) Aug preliminary wholesale inventories M/M: 1.3% V 0.4%E.

Europe

- (UK) BOE  to carry out temporary purchases of long-dated UK Gilts' at whatever scale needed to restore order'; Delays quantitative Tightening (QT) until Oct 31st [from Sept 28th].

- (UK) Aug Car Manufacturing 49.9K units v 58.0K prior, Y/Y: 34% v 8.6% prior (4th consecutive increase) - SMMT.

- (UK) CBI's Danker: Concerned about the inflationary pressures and national debt levels following government’s tax cuts.

Levels as of 01:20 ET

- Nikkei 225, +1%, ASX 200 +2% , Hang Seng +1%; Shanghai Composite +0.5% ; Kospi +1%.

- Equity S&P500 Futures: flat; Nasdaq100 -0.1%, Dax +0.7%; FTSE100 +0.5%.

- EUR 0.9738-0.9674 ; JPY 144.52-144.06 ; AUD 0.6525-0.6470 ;NZD 0.5737-0.5672.

- Gold -0.5% at $1,661/oz; Crude Oil -0.4% at $81.83/brl; Copper -0.5% at $3.3650/lb.