Market News

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Upcoming Market Updates: AUD, JPY, EUR, GBP, CHF, EUR, CAD, USD

AUD: AIG Construction Index, it measures Level of a diffusion index based on surveyed service-based companies.

AUD: GDP q/q, it measures Change in the inflation-adjusted value of all goods and services produced by the economy.

JPY: Leading Indicators, it measures Level of a composite index based on 11 economic indicators.

EUR: German Industrial Production m/m, it measures Change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

GBP: Halifax HPI m/m, it measures Change in the price of homes financed by HBOS.

CHF: Foreign Currency Reserves, it measures Total value of foreign currency reserves held by the SNB.

EUR: Italian Retail Sales m/m, it measures Change in the total value of sales at the retail level.

EUR: Final Employment Change q/q, it measures Change in the number of employed people.

EUR: Revised GDP q/q, it measures Change in the inflation-adjusted value of all goods and services produced by the economy.

GBP: Monetary Policy Report Hearings, BOE MPC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

CAD: Trade Balance, Difference in value between imported and exported goods during the reported month.

USD: Trade Balance, Difference in value between imported and exported goods and services during the reported month.

CAD: BOC Rate Statement, It’s the primary tool the BOC uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.

CAD: Overnight Rate, Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future.

CAD: Ivey PMI, It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

USD: FOMC Member Mester Speaks, Federal Reserve FOMC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

USD: FOMC Member Brainard Speaks, Federal Reserve FOMC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

USD: Beige Book, This analysis is used by the FOMC to help make their next decision on interest rates. However, it tends to produce a mild impact as the FOMC also receives 2 non-public books – the Green Book and the Blue Book – which are widely believed to be more influential to their rate decision.

USD: FOMC Member Barr Speaks, Federal Reserve FOMC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.[/vc_column_text][/vc_column][/vc_row]

7:28 am

Forex News

September 5, 2022

Upcoming Market Updates: AUD, NZD, CHF, EUR, GBP

AUD: AIG Construction Index, it measures Level of a diffusion index based on surveyed construction companies.

AUD: MI Inflation Gauge m/m, it measures Change in the price of goods and services purchased by consumers.

NZD: ANZ Commodity Prices m/m, it measures Change in the global price of exported commodities.

AUD: ANZ Job Advertisements m/m, it measures Change in the number of jobs advertised in the major daily newspapers and websites covering the capital cities.

AUD: Company Operating Profits q/q, it measures Change in the total value of profits earned by corporations.

CHF: GDP q/q, it measures Change in the inflation-adjusted value of all goods and services produced by the economy

EUR: Spanish Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

EUR: Italian Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

EUR: French Final Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

EUR: German Final Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

EUR: Final Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

GBP: Final Services PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the services industry.

EUR: Sentix Investor Confidence, it measures Level of a diffusion index based on surveyed investors and analysts

EUR: Retail Sales m/m, it measures Change in the total value of inflation-adjusted sales at the retail level.

GBP: MPC Member Mann Speaks, BOE MPC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

5:45 am

Forex News

August 31, 2022

Upcoming Market Updates: NZD, GBP, JPY, NZD, AUD, EUR, USD

NZD: Building Consents m/m, it measures Change in the number of new building approvals issued.

GBP: BRC Shop Price Index y/y, it measures Change in the price of goods purchased at BRC-member retail stores.

JPY: Prelim Industrial Production m/m, it measures Change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

JPY: Retail Sales y/y, it measures Change in the total value of sales at the retail level.

NZD: ANZ Business Confidence, it measures Level of a diffusion index based on surveyed manufacturers, builders, retailers, agricultural firms, and service providers.

AUD: Construction Work Done q/q, it measures Change in the total inflation-adjusted value of construction projects completed.

AUD: Private Sector Credit m/m, it measures Change in the total value of new credit issued to consumers and businesses.

JPY: Consumer Confidence, it measures Level of a composite index based on surveyed households, excluding single-person homes.

JPY: Housing Starts y/y, it measures Change in the number of new residential buildings that began construction.

EUR : German Import Prices m/m, it measures Change in the price of imported goods purchased domestically.

EUR: French Consumer Spending m/m, it measures Change in the inflation-adjusted value of all goods expenditures by consumers.

EUR: French Prelim CPI m/m, it measures Change in the price of goods and services purchased by consumers.

EUR: French Prelim GDP q/q, it measures Change in the inflation-adjusted value of all goods and services produced by the economy.

EUR: German Unemployment Change, it measures Change in the number of unemployed people during the previous month.

CHF: Credit Suisse Economic Expectations, it measures Level of a diffusion index based on surveyed institutional investors and analysts.

EUR: CPI Flash Estimate y/y, it measures Change in the price of goods and services purchased by consumers.

EUR: Core CPI Flash Estimate y/y, it measures Change in the price of goods and services purchased by consumers, excluding food, energy, alcohol, and tobacco.

EUR: Italian Prelim CPI m/m, it measures Change in the price of goods and services purchased by consumers.

USD: ADP Non-Farm Employment Change, Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

CAD: GDP m/m, it measures Change in the inflation-adjusted value of all goods and services produced by the economy.

USD: Chicago PMI, it measures Level of a diffusion index based on surveyed purchasing managers in the Chicago area.

USD: Crude Oil Inventories, it measures Change in the number of barrels of crude oil held in inventory by commercial firms during the past week.

5:37 am

Forex News

August 30, 2022

Upcoming Market Updates: JPY, AUD, CHF, EUR, GBP, CAD, USD

JPY: Unemployment Rate, it measures Percentage of the total work force that is unemployed and actively seeking employment during the previous month.

AUD: Building Approvals m/m, it measures Change in the number of new building approvals issued.

CHF: KOF Economic Barometer, it measures Level of a composite index based on 219 economic indicators.

EUR: Spanish Flash CPI y/y, it measures Change in the price of goods and services purchased by consumers.

GBP: M4 Money Supply m/m, it measures Change in the total quantity of domestic currency in circulation and deposited in banks.

GBP: Mortgage Approvals, it measures Number of new mortgages approved for home purchases during the previous month.

GBP: Net Lending to Individuals m/m, it measures Change in the total value of new credit issued to consumers.

CAD: Current Account, it measures Difference in value between imported and exported goods, services, investment income, and current transfers during the previous quarter.

USD: HPI m/m, it measures Change in the purchase price of homes with mortgages backed by Fannie Mae and Freddie Mac.

USD: S&P/CS Composite-20 HPI y/y, it measures Change in the selling price of single-family homes in 20 metropolitan areas.

USD: CB Consumer Confidence, it measures Level of a composite index based on surveyed households.

USD: JOLTS Job Openings, it measures Number of job openings during the reported month, excluding the farming industry.

USD: FOMC Member Williams Speaks, Federal Reserve FOMC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

5:56 am

Forex News

August 26, 2022

Upcoming Market Updates: NZD, JPY, EUR, USD

NZD: RBNZ Gov Orr Speaks, As head of the central bank, which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

JPY: Tokyo Core CPI y/y, it measures Change in the price of goods and services purchased by consumers in Tokyo, excluding fresh food.

EUR: German GfK Consumer Climate, it measures Level of a composite index based on surveyed consumers.

EUR: M3 Money Supply y/y, it measures Change in the total quantity of domestic currency in circulation and deposited in banks.

EUR: Private Loans y/y, it measures Change in the total value of new loans issued to consumers and businesses in the private sector.

USD: Core PCE Price Index m/m, it measures Change in the price of goods and services purchased by consumers, excluding food and energy.

USD: Goods Trade Balance, it measures Difference in value between imported and exported goods during the reported month.

USD: Personal Income m/m, it measures Change in the total value of income received from all sources by consumers.

USD: Personal Spending m/m, it measures Change in the inflation-adjusted value of all expenditures by consumers.

USD: Prelim Wholesale Inventories m/m, it measures Change in the total value of goods held in inventory by wholesalers.

USD: Fed Chair Powell Speaks, As head of the central bank, which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

USD: Revised UoM Consumer Sentiment, Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.

USD: Revised UoM Inflation Expectations, it measures Percentage that consumers expect the price of goods and services to change during the next 12 months.

5:52 am

Forex News

August 25, 2022

Upcoming Market Updates: NZD, JPY, EUR, GBP, USD

NZD: Retail Sales q/q, it measures Change in the total value of inflation-adjusted sales at the retail level.

NZD: Core Retail Sales q/q, it measures Change in the total volume of inflation-adjusted sales at the retail level, excluding automobiles and gas stations.

JPY: SPPI y/y, it measures Change in the price of services purchased by corporations.

EUR: German Final GDP q/q, it measures Change in the inflation-adjusted value of all goods and services produced by the economy.

EUR: German info Business Climate, it measures Level of a composite index based on surveyed manufacturers, builders, wholesalers, services, and retailers.

GBP: CBI Realized Sales, it measures Level of a diffusion index based on surveyed retailers and wholesalers.

EUR: ECB Monetary Policy Meeting Accounts, It’s a detailed record of the ECB Governing Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

USD: Prelim GDP q/q, it measures Annualized change in the value of all goods and services produced by the economy.

USD: Unemployment Claims, it measures number of individuals who filed for unemployment insurance for the first time during the past week.

USD: Prelim GDP Price Index q/q, it measures Annualized change in the price of all goods and services included in GDP.

EUR: Belgian NBB Business Climate, it measures Level of a composite index based on surveyed manufacturers, builders, services, and trade-related firms.

USD: Natural Gas Storage, it measures Change in the number of cubic feet of natural gas held in underground storage during the past week.

5:21 am

Forex News

August 24, 2022

Upcoming Market Updates: CAD, USD

CAD: Corporate Profits q/q, it measures Change in the total value of pretax net income earned by corporations.

USD: Core Durable Goods Orders m/m, it measures Change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items.

USD: Durable Goods Orders m/m, it measures Change in the total value of new purchase orders placed with manufacturers for durable goods.

USD: Pending Home Sales m/m, it measures Change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction.

USD: Crude Oil Inventories, it measures Change in the number of barrels of crude oil held in inventory by commercial firms during the past week.

5:11 am

Economic News

July 6, 2023

China’s ability to implement monetary stimulus is limited as the yuan approaches a 15-year low

As China’s yuan edges closer to a 15-year low against the dollar, the country’s capacity to stimulate its struggling economy via monetary policies is increasingly constrained. In Shanghai, the yuan was trading at 7.244 against the dollar at the end of Wednesday, nearing its weakest level since last November. The situation is primarily attributed to U.S. interest rates consistently surpassing their Chinese equivalents.

The People’s Bank of China (PBOC), the country’s central bank, has repeatedly affirmed its commitment to managing drastic fluctuations in exchange rates. However, the Federal Reserve’s repeated rate hikes have pushed U.S. long-term interest rates above China’s for the first time in about 12 years, thereby limiting the PBOC’s options. Fed projections suggest two more rate hikes in 2023, potentially raising long-term rates to almost 4%. Meanwhile, China’s benchmark 10-year government bond yield hovers around 2.7%, near an all-time low. This disparity has undermined China’s ability to attract capital.

These developments are sounding alarm bells within the Chinese government, which still vividly remembers the “yuan shock” of 2015 when control over the exchange rate nearly slipped from its grasp. To counter the currency’s depreciation, the PBOC has reportedly directed lenders to slash interest rates on dollar deposits. Furthermore, state-owned institutions such as the Bank of China have reduced rates on six-month time deposits for retail customers, thus removing the incentive for depositors to trade yuan for other currencies.

Simultaneously, China is grappling with a challenging economic recovery. For three consecutive months, the manufacturing purchasing managers’ index has remained below the critical 50 mark, indicating contraction. Even though the zero-COVID policy has been abandoned, concerns over job security and income continue to linger, while a weak property market is adding to disinflationary pressure.

Despite these challenges, the PBOC is cautious about implementing significant rate cuts to stimulate the economy. It fears that such a move would broaden the rate differential with the U.S., thereby accelerating the yuan’s decline. Instead, the Chinese government is considering indirect measures like adjusting the countercyclical variable as primary tools to resist the downward pressure on the yuan. The government is reluctant to deplete its foreign exchange reserves through direct intervention.

The situation showcases a delicate balancing act for the Chinese government. On one hand, it needs to stimulate economic growth, but on the other, it must avoid a free-fall of its currency, which could trigger financial instability. Given the current global economic climate and the recent history of the yuan shock, the stakes are higher than ever, making this a closely watched issue in global financial markets.

6:50 am

Economic News

July 5, 2023

Allianz’s Subran Warns of Increased Risk of Policy Mistakes from Fed or ECB

Ludovic Subran, Chief Economist at Allianz, has warned of the potential for policy missteps by US or euro-zone policymakers as they seek to tighten monetary conditions. Such errors could pose a serious threat to the global economy. During an interview with Bloomberg Television, Subran voiced his concern that central banks could overshoot in their attempts to rein in consumer prices, potentially disrupting the anticipated “soft landing” of the economy.

Subran’s perspective on the economy is heavily influenced by the determination of central banks to suppress inflation. He expressed, “The economic trajectory is intensely reliant on the will of central banks to curb inflation.” He went on to clarify that one of the main risks to the global economy is the chance of policy blunders by these institutions. A blend of fiscal and monetary tightening could create a toxic policy mixture detrimental to the economy.

In the present economic atmosphere, policymakers from developed economies continue to lean towards interest-rate hikes. The US Federal Reserve and the European Central Bank are both projected to declare rate increases later this month. Concurrently, in Australia, officials have kept borrowing costs steady but have suggested additional action if needed.

Subran cautioned about the possibility of policy errors if central banks retain stringent monetary policies for a prolonged period. He pointed to recent conversations among officials at the ECB’s annual retreat, speculating on the potential ramifications of the ECB maintaining elevated rates while also introducing more hikes throughout 2024. He noted, “Should this scenario materialize, it would be a policy mistake, as the real economy would begin to experience the impact of this embedded tightening. By that point, it would already be too late for the central bank to shift gears.”

The ECB’s historical policy errors, particularly the premature tightening cycles initiated in 2008 and 2011, serve as reminders of the risks associated with overly aggressive monetary tightening.

When asked about enduring risks to the financial system, Subran conceded that these dangers have not vanished. He recommended prudence regarding liquidity for at least the coming year and raised concerns about excessive leverage and credit risk. He underscored the importance of rigorous testing by financial institutions. Subran also reminded that financial mishaps can stem from external shocks, such as those associated with climate risks. His remarks highlight the intricacy and delicate balance required in managing economic policy, especially during uncertain times.

10:13 am

Economic News

July 4, 2023

Quiet Market Witnesses Low Trading Volumes Amid US National Holiday

The global financial markets recently experienced low trading volumes, largely attributed to the US national holiday, Independence Day. This resulted in closed US cash markets and a significant number of investors taking extended weekends, further contributing to the low activity.

In the UK, gilts experienced a sell-off, which subsequently dragged core peers along in its wake. This was triggered by a YouGov and Citi poll that showed a rise in the UK’s public inflation expectations for the forthcoming year to 5% in June. This underperformance was reflected in the front end of the curve, with a rise of more than 11 basis points (bps) in the UK, 8 bps in Germany, and 6 bps in the US. However, this momentum was slowed with the release of the June US ISM manufacturing gauge, which slipped to 46 from the previous figure of 46.9.

Despite these large intraday swings in yields, currency markets remained largely unaffected. Major pairs like EUR/USD and DXY fluctuated around 1.09 and 103 respectively, while EUR/GBP hovered around 0.86. The Japanese yen lost some ground, with USD/JPY still near the September 2022 FX intervention levels (145). Meanwhile, European equities ended flat, and Wall Street finished marginally higher on the holiday-shortened trading day.

The highlight in Asian trading was the Reserve Bank of Australia’s (RBA) policy decision. The RBA kept its policy rate unchanged at 4.1%, leading to a minor hit to the Aussie dollar. Concurrently, the Chinese Yuan (CNY) strengthened slightly after the People’s Bank of China (PBOC) continued its streak of stronger-than-expected fixings. Japan’s yen stabilized, and core bonds traded sideways.

The Australian economy has shown signs of slowing, and conditions in the labour market have eased, although they remain tight. Australian inflation has passed its peak but will remain high for some time. The RBA Board remains alert to inflation risks that could lead to larger increases in prices and wages. The Aussie dollar lost some ground, with AUD swap yields up to 4 bps lower at the front end.

In the UK, Megan Greene, who is set to join the Bank of England’s Monetary Policy Committee in August, argued against estimates that the long-run neutral rate (r-star) has barely budged after the combined hit of the pandemic, the Russian war, the energy crisis, and an end to the low inflation era. Greene’s stance suggests she’ll be a hawkish vote within the MPC.

Looking ahead, with the lack of US investors and a sparse economic calendar due to the holiday, the markets are likely to see predominately technical trading. The focus remains on the latter part of this week, especially following the market reaction to the slightly disappointing US manufacturing ISM.

9:41 am

Economic News

July 3, 2023

DXY Falls Under 103.00 Amid Varied Sentiment, Anticipates Fed Minutes, US NFP

The US Dollar Index (DXY), a measure of the US dollar’s strength against a group of other major currencies, has seen a significant drop, touching an intraday low of around 102.90. This downward shift continues the retreat from a three-week high observed the previous day and primes the market for a key week with the impending release of the Federal Open Market Committee (FOMC) monetary policy meeting minutes and the US jobs report.

The recent weakening of the DXY can primarily be attributed to less-than-stellar US inflation indicators and consumer spending data. These disappointing figures have cast a cloud of uncertainty over the previously bullish outlook held by the Fed. Despite this, the ambiguity surrounding US-China relations and current market volatility is offering some support to DXY prices.

Delving into the specifics, the US Personal Consumption Expenditure (PCE) Price Index for May, which is the Fed’s favoured inflation metric, reported a figure of 0.3% MoM and 4.6% YoY. These numbers fell short of market predictions, indicating the smallest annual increase in half a year and challenging the prevailing idea of sustained inflationary pressures.

Moreover, the PCE Price for Q1 2023 experienced a decrease to 4.1% QoQ, from the expected 4.2%. Alongside a -2.7% MoM decline in Pending Home Sales for May, these trends suggest a deceleration in consumer spending and a potential easing of inflation rates. This brings into question Fed Chair Jerome Powell’s advocacy for “two more rate hikes in 2023”.

Adding to the complexity is the recent confirmation of US Treasury Secretary Janet Yellen’s trip to China from July 06-09. While the news may initially seem favourable, it has provoked mixed responses among DXY traders. Concerns regarding human rights abuses against the Uyghur Muslim minority, China’s ban on sales of Micron Technology memory chips, and measures against foreign due diligence and consulting firms could potentially temper the initial enthusiasm.

Amidst these developments, S&P500 Futures are showing a rising trend, pointing towards a positive outlook for Wall Street, while US Treasury bond yields remain resilient.

Looking ahead, the US ISM Manufacturing PMI for June is expected to be a notable risk catalyst influencing intraday movements. However, the primary attention will undoubtedly be on the Fed Minutes and US jobs report, as traders look for clearer indications of the market’s direction.

8:34 am

Economic News

June 30, 2023

Mid-Year Outlooks for APAC Sector Less Risky Due to China’s Recovery

The mid-year outlooks for the Asia-Pacific (APAC) sector seem less risky, largely attributable to China’s economic recovery. This represents a significant pivot from previous predictions, highlighted by Fitch Ratings’ recent analysis of 47 mid-year sector outlooks in APAC. Of these, they classified 13 as ‘deteriorating’, 30 as ‘neutral’, and four as ‘improving’.

These figures underscore the impact of eight outlook changes since the release of the 2023 sector outlooks in late 2022. Among these alterations, seven were positive, with the only negative revisions being the shift in the outlook for Australia and New Zealand banks from ‘neutral’ to ‘deteriorating’.

A deeper examination of Fitch Ratings’ portfolio of sectors in APAC reveals that the share of outlooks assessed as ‘deteriorating’ stands at 28%, a figure considerably larger than the 8% deemed to be improving. However, this signifies a marked enhancement from the initial sector outlooks for 2023 when 39% of outlooks were categorized as ‘deteriorating’, and a mere 4% as ‘improving’.

Despite the persisting challenges, Fitch Ratings anticipates lower growth in most regions in 2023 compared to 2022. Export prospects continue to be frail, but the region is seeing modest benefits from China’s reopening. Moreover, domestic demand is stronger in some regions than Fitch Ratings had previously projected. Decreasing inflation rates should also bolster consumer spending.

Most APAC sovereign nations are experiencing a reduction in external imbalances. However, Fitch Ratings expects the decrease in the fiscal deficit in 2023 to be moderate in most areas. High household debt and falling house prices present a vulnerability in Australia, New Zealand, and Korea, but Fitch Ratings believes these risks are manageable at present.

The comprehensive outlook on the APAC Corporates sector has transitioned from ‘deteriorating’ to ‘neutral’. This shift follows outlook revisions on China Engineering & Construction, China Steel & Cement, and Global Mining from ‘deteriorating’ to ‘neutral’.

Numerous Chinese corporations have profited from the country’s reopening since late 2022. Nevertheless, Fitch Ratings still predicts the aggregate net debt/EBITDA leverage for APAC corporates overall to escalate from 2.1x in 2022 to 2.5x. This rise is driven by the weaker global economic environment and high capital intensity. Nevertheless, it’s clear that China’s recovery has played a vital role in mitigating the risks to the mid-year outlooks for the APAC sector.

10:31 am

Economic News

June 29, 2023

Bank of Japan’s Chief Defends Monetary Easing Amid Yen’s Decline

Kazuo Ueda, the current head of the Bank of Japan, has publicly supported the institution’s continuous implementation of monetary easing policies, despite the ongoing depreciation of the yen. He justified this by pointing out that, although the headline inflation rate is above the set target of 2%, the core inflation rate remains below this benchmark.

Ueda made these comments while attending the ECB Forum on Central Banking in Portugal. This event was attended by officials from the central banks of the United States, Europe, and the United Kingdom. During his address, Ueda noted that the value of the Japanese currency is subject to a multitude of influences, including the policy decisions made by these international central banks.

Despite his defense of the current monetary policy, Ueda expressed some uncertainty about the stability of inflation rates in Japan over the forthcoming years. However, he did acknowledge that should the central bank gain substantial confidence in future inflation stability, they would consider adjusting their policy approach accordingly.

The stance of the Bank of Japan stands in stark contrast to the fiscal strategies employed by the central banks of the US, UK, and Europe. These institutions have chosen to hike interest rates as a means of battling inflation, whereas the Bank of Japan has opted for an approach centered around ultra-low rates and market liquidity enhancements.

The influence of international monetary policy on the yen was further highlighted when the US dollar saw a brief surge to a seven-and-a-half-month high against the Japanese currency. This followed comments made by Jerome Powell, Chair of the US Federal Reserve, hinting at potential further restrictions on monetary policy.

As the yen continues to face selling pressure due to the anticipated widening of the interest rate gap between Japan and the US, Japanese authorities have issued verbal warnings. Ueda reassured that they are closely monitoring the situation. However, he emphasized that the final decision to intervene in the financial market lies in the hands of the Ministry of Finance.

In conclusion, while the head of the Bank of Japan is defending the current monetary easing policy amidst a weakening yen, he acknowledges the potential need for change if confidence in future inflation stability increases. Meanwhile, the bank continues to carefully observe the global economic landscape and the impact of other central banks’ policies on the Japanese economy.

9:00 am

Economic News

June 28, 2023

Xi Jinping of China Eases Foreign Investor Concerns Over Policy Uncertainties

In a bid to alleviate concerns and uncertainties, Chinese President Xi Jinping has recently assured foreign investors of his government’s unwavering commitment to addressing economic issues and unpredictable policy-making. Amid a backdrop of global apprehension, Xi underscored China’s dedication to development, openness, and the protection of foreign investors’ rights during his recent visit to Beijing, as reported by Xinhua News Agency.

China’s economy has been grappling with a slower recovery pace, particularly post-Covid Zero policies. This has led to intensified efforts by the nation to attract foreign investors. Compounding this situation are the endeavours by Western powers, including the US and Europe, to reduce their reliance on China, thereby creating an air of uncertainty about the country’s future growth prospects.

During the “Summer Davos” dialogue in Tianjin, Chinese Premier Li Qiang spoke emphatically about China’s readiness to collaborate with global entrepreneurs. He cautioned against the politicization of economies, urging CEOs to ensure the security of their supply chains, a sentiment he echoed during his recent visit to Germany.

Insights from Andy Chen, a senior analyst at Trivium China, highlight a unique aspect of Chinese policymaking. According to him, decision-making authority is preferred to be vested with companies rather than foreign governments. This approach allows for a more direct influence on companies, enabling policymakers to incentivize businesses that focus on mitigating risks in specific areas.

Meanwhile, prominent business figures have been making their way to China. Bernard Arnault, CEO of LVMH, recently made his first visit since the onset of the pandemic, meeting local teams in several cities. His visit follows similar trips by other industry leaders such as Jamie Dimon of JPMorgan, Tesla’s Elon Musk, and Tim Cook from Apple.

In a move to bolster ties, New Zealand’s Prime Minister Chris Hipkins also made a recent trip to China. His visit aimed to strengthen the economic relationship between the two nations by fostering new business connections.

Chinese firms have been vocal about the government’s role in promoting investment. Tech companies, in particular, have been encouraged to access capital markets and private financing without restrictions. Fred Hu, CEO of Primavera Capital, emphasized the importance of eliminating obstacles for Chinese tech companies to thrive.

However, the Chinese government’s crackdown on foreign consultancy firms and sudden regulatory tightening measures across various sectors have somewhat subdued the appetite for overseas firms’ investment. This has resulted in foreign capital retreating from China’s financial markets. Despite President Xi’s emphasis on economic development, the government’s increasing focus on national security has become more evident. Consequently, skepticism may overshadow China’s attempts to charm foreign investors.