China And Japan Resume Currency Swap Agreement

Oct 26 18, 06:33 GMT

General Trend:

Asian equity markets generally decline in early trade
Shanghai Composite moves between gains and losses
Nasdaq Futures decline in Asian trading; Google, Amazon and Western Digital decline post earnings
Fujitsu declines following earnings
Kia Motors Q3 results hurt by quality costs, shares rise on the session
Canon Inc declines over 5%, cut FY forecast
Fuji Electric shares volatile post earnings
China fixed the USD/CNY rate above 6.95, first time since early Jan 2017
Japan/China business deals in focus amid PM Abe’s visit to China
Fed’s Mester comments on IOER, housing market
US Q3 Advance GDP data due later today

Headlines/Economic Data

Australia/New Zealand

China/Hong Kong

Shanghai Composite opened +0.3%, Hang Seng opened +0.2%
(CN) CHINA PBOC SET YUAN REFERENCE RATE: 6.9510 V 6.9409 PRIOR (first fix above 6.95 since Jan 4 2017)
(CN) China Premier Li: Reiterates China will not engage in competitive devaluation of yuan (CNY) currency; China willing to advance Japan ties and return to healthy and normalized ties
(CN) PBoC Pan: Reiterates stable fundamentals to keep yuan (CNY) currency stable; yuan ‘healthy’ amongst emerging market (EM) currencies
(CN) China PBoC Open Market Operation (OMO): Skips OMO v CNY100B injected in 7-day reverse repos prior: Net: CNY30B drain v CNY100B injection prior
(CN) China PBoC said to ask banks not to call back loans ‘indiscriminately’ – Chinese Media
(CN) China Agriculture Ministry: Mandates additional laboratories to conduct African Swine Fever virus tests
(CN) China said to tell large state-owned companies to halt purchases of oil from Iran – US financial press

Japan

Nikkei 225 opened +0.8%
(JP) Some at the Bank of Japan (BoJ) said to see 10-year JGB yield limit higher than 20bps; officials are said not to want ‘sharp’ 10-yr yield moves – US financial press
(JP) China NDRC He: Japan-China companies to sign about 50 memorandums of understanding (MOUs) today
(CN) China and Japan sign 3-yr agreement for CNY200B or ¥3.4T currency swap
(CN) China and Japan said to sign agreement to prepare annual plans for talks, dialogues and exchanges – financial press
(JP) Japan PM Abe comments from Beijing (China): Wants to bolster China cooperation on intellectual property
(JP) Japan Finance Min Aso: At the earlier this year Japan/China summit talked about the yuan (CNY) currency, would like discussions to speed up this time; US trade deficit with China should be decreased

Korea

Kospi opened +0.2%
(KR) South Korea Exchange: Closely monitoring market-related data; US rate hikes and trade tensions impact domestic stock market
(KR) South Korea Oct Consumer Confidence: 99.5 v 100.2 prior

Other

(MY) Malaysia Sept CPI Y/Y: 0.3% v 0.6%e (lowest annual pace in three years)
(PH) Philippines Central Bank (BSP) Gov Espenilla: To gauge if one more modest rate hike is needed, 2019-2020 CPI forecasts are key
(SG) Monetary Authority of Singapore (MAS): No significant deterioration in domestic exports to China yet

North America

US equity markets ended higher: Dow +1.6%, S&P500 +1.9%, Nasdaq +3.0%, Russell 2000 +2.2%
Mellanox Technologies [MLNX]: Mellanox said to be working with adviser on possible sale – CNBC
(US) Fed Vice Chair Clarida: Some further rate hikes are warranted; Possible trend growth has shifted higher and structural unemployment moved lower; Signals on inflation ‘Not flashing red’ (first comments since joining the Fed in Sept)
(US) Fed’s Mester (hawk, FOMC voter): Nearing end of extraordinary policy, close to ‘normal’; reiterates expects further gradual US rate hikes; no compelling reason to drop interest rate target range

Europe

(UK) Brexit talks reportedly are paused due to disagreements within PM May’s own cabinet – press
(EU) ECB said to be studying distributing large Public Sector Purchase Program (PSPP) reinvestments over a longer period from next year on – press
(EU) ECB’s Villeroy: question of TLTROs will need to be considered; ECB is increasingly confident in the inflation path – comments in Paris

Levels as of 01:30ET

Nikkei 225, -0.3%, ASX 200 flat, Hang Seng -1.1%; Shanghai Composite -0.2%; Kospi -1.7%
Equity Futures: S&P500 -0.6%; Nasdaq100 -1%, Dax -1.2%; FTSE100 -0.8%
EUR 1.1377-1.1360; JPY 112.46-112.11 ; AUD 0.7084-0.7023 ;NZD 0.6532-0.6473
Dec Gold +0.2% at $1,234/oz; Oct Crude Oil -1% at $66.69/brl; Dec Copper -0.5% at $2.735/lb