FOREX NEWS & BLOG

• US President Biden has ordered “all available federal firefighting assets” to Canada
• Citi forecasts gold to USD2200 after a dip first
• China financial regulator says economy still recovering, demand will increase
• Australian April Exports -5% m/m (prior 4%) & Imports 2% m/m (prior 2%)
• South Korea’s fin min says inflation is still high, will be the policy focus for now
• PBOC sets USD/ CNY reference rate for today at 7.1280 (vs. estimate at 7.1282)
• More Chinese banks cut rates
• Chinese media speculate on a loan prime rate cut after banks reduced deposit rates
• The PBOC is expected to set the USD/CNY reference rate at 7.1282 – Reuters estimate
• Industrial and Commercial Bank of China cuts yuan deposit rates
• Japan Q1 GDP +0.7% q/q (flash was just +0.4%)
• Eyes on the PBOC CNY rate today after a slump in CNH overnight
• UK labour market momentum slowing – starting salaries rose at the weakest pace in >2 years
• UK data shows home buyer net enquiry balance highest since May last year
• New Zealand Q1 data: Manufacturing sales volumes -2.1% q/q
• Goldman Sachs says widespread adoption of AI puts S&P500 fair value up to 14% higher
• There is circa US$3bn in FX option expiries at 140.00 in USD/JPY at the 10am NY cut today
• Soros’ CIO expects more US banks to fail – more problems lurking beneath the surface
• MUFG sees limited scope for USD/JPY to move higher from its current level
• ICYMI: Druckenmiller sees profits down 20-30%, higher terminal Fed rate, but he likes NVDA
• ICYMI: Yellen spoke Wednesday: lowering CPI a ‘top priority’ & supports crypto regulation
• Forexlive Americas FX news wrap: Bank of Canada surprises with another rate hike
• Trade ideas thread – Thursday, 8 June 2023
• NASDAQ index closes sharply lower

There
were yuan deposit rate cuts by a range of Chinese banks today after
calls from the authorities to do so. The cuts are aimed at providing
a boost to the economy and have sparked renewed speculation of a Loan
Prime Rate cut from the People’s Bank of China this month. As a
reminder, the Medium Term Lending Facility (MLF) rate is set by the
People’s Bank of China each month on the 15th
(or the nearest business day if this falls on a weekend) with the
Bank’s Loan Prime setting on the 20th
(ditto). The 15th
is a week away, the 20th
nearly two.

The
yuan (CNH) had lost ground overnight. USD/CNH had climbed above 7.15
for the first time in 2023 and it retested above there during the
session here. The People’s Bank of China is allowing the yuan to
slide, the CNY reference rate was set weak (USD/CNY higher) again
today.

The
news of lower rates in China to spur the economy and the lower yuan
likewise provided cross-currents for China and China-proxy trades,
such as AUD. Stimulus is a positive but the lower yuan will make
imports into China more expensive, not a positive for the global
economy. AUD/USD inched a little net higher in a very narrow range.
EUR, NZD, GBP, CAD and even yen all similar.

Other
news took a back seat to what was happening in China. OK, I
exaggerate, there was no other news. Data flow, however, included
better than expected Q1 economic growth data (GDP) from Japan and a
miss on Australian exports in April.

Asian
equity markets:

• Japan’s Nikkei 225 -0.1%

• China’s Shanghai Composite -0.1%

• Hong Kong’s Hang Seng -0.2%

• South Korea’s KOSPI -0.3%

• Australia’s S&P/ASX 200 +0.04%

This article was written by Eamonn Sheridan at www.forexlive.com.

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Li Yunze is Director of China’s National Administration of Financial Regulation. Out with some upbeat remarks:

• economy is still recovering
• demand will be boosted, expanded
• will optimise private financing, strengthen financial services for private business
• the recent global banking crisis has had little impact on China but does offer a cautionary tale
• China has the conditions and confidence to prevent systemic financial risks

China pumping up the positivity today, earlier:

• Industrial and Commercial Bank of China cuts yuan deposit rates

• Chinese media speculate on a loan prime rate cut after banks reduced deposit rates
• More Chinese banks cut rates

This article was written by Eamonn Sheridan at www.forexlive.com.

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