OVERNIGHT NEWS
# Dollar bid vs G10 in Asia, DXY capped below 110. 10y UST steady around 3.45%, stocks largely trade risk-off. UK markets closed.
# Week ahead: central banks to raise rates in the US (SG forecast +75bp), UK (SG forecast +50bp), Switzerland (consensus +75bp), Sweden (consensus +75bp), Norway (consensus +50bp), South Africa (consensus +75bp), Brazil, Turkey, Indonesia, and Philippines.
# China: PBoC sets yuan fixing 647pips above forecast 6.9396, strongest bias on record. Separately, PBoC offers CNY10bn liquidity into quarter-end, the 14-d reverse repo rate lowered by 10bp to 2.15%.
# S. Korea: Authorities to meet with companies tomorrow to discuss ways to stabilize dollar supply and demand. Banks asked to report FX positions each hour to strengthen monitoring of FX market. USD/KRW +0.25% at 1,393.
# SG Weekly Technicals: Euro Stoxx 50, 10Y UST, EUR 10Y IRS, DXY, EUR/GBP, USD/JPY, USD/MXN, USD/KRW, USD/TRY and Gold.
# CFTC FX positions: EUR shorts cut to 1.6% of OI. GBP shorts jump to 22.4%, JPY raised to 28.6%, AUD shorts unchanged at 31.7%, CAD longs reduced to 8.3%, CHF shorts double to 16.3%, MXN shorts whittled back to 12.2%.
# Nikkei closed, Hang Seng -1.1%, EUR 10y IRS +1bp at 2.54%, Brent crude -0.4% at $91.1/b, Gold -0.5% at $1,666/oz.
Central bank decisions galore this week
Half-mast
Today’s NY Open is abbreviated and published from Asia – normal coverage will resume on September 20.
Risk off accelerated as Europe came in today. A dip in crypto assets (after local press reports India is considering fresh taxes) appears to be the catalyst to what was mostly an otherwise uneventful session. US equity futures, as well as commodities dropped as a result. Holidays and the upcoming central bank decisions have resulted in lower volumes today, around 40% lower than 30d averages according to our etraders. The greenback leads the G10 complex, with high beta currencies trading lower. Cash US treasuries were closed, although we note a hawkish drift ahead of the Fed decision. US President Biden was on the wires overnight, stating that the US would defend Taiwan if there was an unprecedented attack.
Ahead, with the Japanese and UK holidays, cash treasuries are set to open in the NY session. The calendar for the day is fairly light on events. We watch for ECB speak today, with De Cos and Villeroy on the wires. We’ve seen comments from all of them recently, which we found still hawkish. We are unlikely to hear anything materially new but continue to look for preference of hike for the October meeting and discussion of QT.
COP: Economic Activity NSA YoY at 17:00 BST for Jul. (September 19)
UST 5s30s curve steepening accelerates after decline in 5y5y inflation expectations; UK retail sales decline sharply, GBP/USD falls to a low since 1985; Gilts twist flatten; ECB’s Lagarde stresses focus on the price-stability target; USD/CNH reaches 7.04 overnight; US 10y at 3.449% (+0.0bp).
