ForexLive Asia FX news wrap: China data beats … but about the weekend

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Forex news for Asia trading Friday 14 July 2017

Weekend:

It was a Japanese market holiday today which thinned liquidity, and interest it seems, somewhat. The focus was on China, the outcome of the once-every-five-years National Financial Work Conference meeting over the weekend:

(Oh, and that’s not all notable about the weekend, but I’ll come to that soon)

And of course the GDP and other data:

To the China data first, it was nearly ‘beats’ all ’round (see bullets) but that translated into very limited responses indeed from currencies. Pretty much everything remained in a small range for the entire session, pre-China data and post-China data.

Pre-data, we got a minor wiggle on a speech from Reserve Bank of New Zealand Deputy Governor Geoff Bascand, Bloomberg reporting his currency comments:

NZD/USD dropped a quick 20 or so points with others losing a handful of points here and there against the USD alongside.

China data gave the AUD a small blip back up, a few points only (i.e. small range for the entire session).

Big, big movers on the day though were Chinese stock markets, with substantial falls (and then recovery).

Shanghai Comp:

Falls were attributed to the outcome of the National Financial Work Conference which emphasized reform and ‘firm’ monetary policy (see bullets above and also this in the Wall Street Journal:

  • Chinese equity markets tumbled shortly after trading began on Monday, dragged by a plunge in small-cap stocks after a high-profile financial conference signaled that policy makers are focused on tighter control of the economy.
  • Policy makers at the National Financial Work Conference, which wrapped up on Saturday, mentioned “risk” 31 times and “regulation” 28 times, noted Jack Siu, an investment strategist for Asia-Pacific at Credit Suisse.
  • “Good news is now bad news,” said Mr. Siu. “The logic behind that is the [People’s Bank of China] and the government are looking to balance the risk prevention versus a moderate GDP growth.”

).

As I said, the equity market falls were attributed to this story. There are always background concerns on China’s economy and markets, so there may be more to break.

Another thing that was also notable from the weekend was the fall in the price of Bitcoin (and others of the ilk), perhaps there is something here too. I’ll leave further elaboration on the whys and wherefores to others; China stocks are not the world’s most liquid markets at the best of times and moves can extend beyond what appears reasonable; they’ve done so before and will again.

BTC (I circled Saturday and Sunday):

Also from China today, the PBOC strengthened the CNY against the USD, hardly surprising given Friday’s USD move … but it was a huge injection of liquidity that raised some eyebrows (a net injection of 140bn yuan today, which is large given recent PBOC miserly conduct with injections).

Regional equities:

  • Nikkei +0.09%
  • Shanghai -0.11%
  • HK +0.63%
  • ASX +0.07%



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