G3: Germany July PPI
Asia: Taiwan July Export Orders, Thailand 2Q GDP
Market Highlights
US stocks closed lower on 18th August, as concerns over China’s real estate sector and economy, and higher-for-longer Fed interest rate continued to dent market sentiment. The S&P 500 ended marginally lower, while the Nasdaq Composite slid 0.2%. The selloff in US Treasuries paused on Friday, with yield on the benchmark 10-year finished the day at 4.25%, down 2bps from Thursday’ levels that were approaching October’s intraday high.
In currency, the dollar index slipped 0.2% last Friday, with the yen outperforming G-10 peers for the second straight day. The pound was down for the first time in four days on weaker-than expected retail sales for July. UK retail sales fell 1.2%mom last month, down from a rise in June and below market consensus.
Meanwhile, there was news saying Chinese authorities encouraged companies listed on its Shanghai science and technology board to buy back their shares this week to boost market confidence.
Regional FX
Most Asian currencies weakened against the dollar, with the Philippines peso leading gains with a 1.1% appreciation. PHP extended gains after BSP governor Eli Remolona said on Friday that the central bank has room to resume hiking interest rates without contracting the economy. That came after the BSP kept its overnight borrowing rate unchanged at 6.25% for a third straight meeting a day before.
Elsewhere, MYR tracked gains across the region even as the country released disappointing figures. Data on Friday showed that Malaysia's exports slumped 13.1%yoy in July after falling 14.1%yoy in June. Other data showed Malaysia’s GDP growth decelerated more than expected to 2.9%yoy in 2Q. Notably, despite a weaker dollar and continued support from the Chinese authorities, with the PBOC setting USD/CNY fixing 1041 pips lower than the average Bloomberg estimate to 7.2006 on Friday, the largest deviation to estimates on record, the Chinese yuan consolidated amid cautious sentiment toward China’s markets, with Northbound Stock Connect recording USD1.17 bn net selling last Friday. PBOC’s decision on 1-year and 5-years LPRs comes into focus today after cutting its 1-year MLF rate by 15bps last week.
DOLLAR INDEX AND ASIA DOLLAR INDEX
Source: Bloomberg
