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Citi
European Open
A relatively quiet session in Asia, with USD trading flat. News from China dominated the headlines with an update on Evergrande, which resumed trading. A statement filed with the Hong Kong exchange during NY hours noted that there were no further progress on asset sales, as some of its dollar bonds approached their deadline. However, we note that contagion risks are limited in nature. Zhengzhou thermal coal futures plunged almost 10% to hit its trading limit as regulators said they would increase enforcement measures as well as crackdown on speculation and hoarding.
Looking ahead, we flag a light day for data, with the G10 only seeing US Initial Jobless and Continuing Claims (13:30 BST) and AUD’s Lowe speaking (20:00 BST). On the EM front, we note rate decisions in TRY (12:00 BST), where Citi Economics forecasts a 100bps reduction to 17.0%, and a decision in UAH, where we expect no change. We also see PLN Retail Sales (09:00 BST) and ARS Trade Balance (20:00 BST)
USD saw a slight downtick on an Asian morning, which saw most G10 currencies flat against the greenback. S&P futures and UST traded flat as well.
The NY session saw USD traded mixed early, but wilt into the Asia Open. Risk sentiment explained this situation, driving commodity prices and equities higher and front-end Treasury yields lower
Credit Agricole
Asia overnight:
Sentiment was steady early in Asia as investors traded off inflation worries and concerns about China’s property sector against strong corporate earnings. US breakeven inflation has reached its highest levels since 2013 and even in Japan, a similar measure, is the highest it has been in three years. China’s Evergrande resumed trading and remains weighed down by liquidity concerns, but other Chinese developers managed to rally. Later in the Asian session, however, equities turned south which led to some risk-off trading as well as stop-loss runs in JPY crosses. At the time of writing, Asian bourses were trading mixed and S&P500 futures were significantly in the red. The NZD and NOK were the weakest performers in G10 FX and the JPY top performer.
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