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Market Update – Asian Session: Markets Little Changed As BOJ And Fed Decisions Come In As Expected

Asia Summary

Asian equity markets opened mixed, Google and HTC confirmed a cooperation agreement with the transfer of some employee assets to Google. Nikkei opening the strongest ahead of BOJ. Broad dollar strength the theme in the currencies, after the Fed statement was widely in line with expectations. Bank of Japan (BOJ) also left policy unchanged, as expected. Little movement in USD/JPY as a result, holding around 112.40. Dissenter Kataoka said yield curve control is not enough to meet inflation target ~FY19 and sees low chance of CPI increasing from 2018 on.

China PBOC sets yuan reference rate-0.3% at 6.5867, the weakest level since Sept 1st. Onshore yuan fell 0.4% to 6.601 per dollar, in line for weakest closing level since Aug. 28 . Offshore yuan declines 0.2% to 6.5984. The HKMA was un-usually chatty about the HK$, saying they believe the USD/HKD to eventually weaken to 7.85 (currently 7.8013) v trading band 7.75-7.85; Will not roll out measures to support HK$ rate.

Key economic data

(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

(NZ) NEW ZEALAND Q2 GDP Q/Q: 0.8% V 0.8%E; Y/Y: 2.5% V 2.5%E

(KR) South Korea Sept Exports 20-days Y/Y: +31.1% v 11.6% prior; Imports Y/Y: 23.9% v 11.2% prior (corrected by South Korea Customs Agency)

(AU) Australia Aug RBA Govt FX Transactions (A$): -0.6B v -1.03B prior

(NZ) NEW ZEALAND AUG CREDIT CARD SPENDING M/M: -0.7% V 0.8% PRIOR; Y/Y: 6.4% V 7.1% PRIOR

Speakers and Press

China/Hong Kong

(CN) PBoC Guangzhou Branch bans long-term consumer loans – Chinese Press

USD/HKD (HK) HKMA’s Yue: Believes USD/HKD to eventually weaken to 7.85 (currently 7.8013) v trading band 7.75-7.85

(CN) China National Development and Reform Commission (NDRC) releases guidelines related to minimum and maximum coal inventories: Coal producing regions must guarantee supply

(CN) China Commerce Ministry (MOFCOM): Hopes can work together with EU and oppose global trade protectionism; willing to quicken China/EU investment talks and expand bilateral investment

Korea

(KR) South Korea Vice Fin Min: Impact of FOMC on domestic markets won’t be ‘big’

(KR) Korea Institute for International Economic Policy (think tank) says China’s actions related to Thaad missile defense system hurt the Chinese

(KR) Bank of Korea (BOK) quarterly statement on financial stability: household debt growth is expected to stabilize on property measures released Aug. 2 and additional steps to be released soon on household debt

Japan

(JP) Columbia University professor Takatoshi Ito (candidate to be next BOJ Gov): If the BOJ reaches its 2% inflation target in two years, it will take another five years to wind down

New Zealand

(NZ) RBNZ comments on approach for bank disclosure: Key bank metrics to be disclosed quarterly

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.4%, Hang Seng +0.0%; Shanghai Composite +0.2%, ASX200 -1.0%, Kospi +0.0%

Equity Futures: S&P500 -0.0%; Nasdaq100 -0.1%, Dax +0.0%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1895-1.1865; JPY 112.64-112.27; AUD 0.8034-0.7993;NZD 0.7364-0.7326

Dec Gold -0.2% at $1,303/oz; Nov Crude Oil +0.0% at $50.70/brl; Dec Copper -0.6% at $2.94/lb

(CN) PBoC OMO: injects CNY60B in 7 and 28-day reverse repos v injected combined CNY30B in 7 and 28 day reverse repos prior

USD/CNY (CN) China PBOC sets yuan reference rate at 6.5867 v 6.5670 prior (weakest level since Sept 1st)

(NZ) New Zealand sells NZ$200M in 2.75% 2025 bonds; avg yield 2.9072%; bid-to-cover 3.91x

(TH) Thailand Central Bank sells THB45B in 3-yr central bank bond; avg yield 1.5024%; bid-to-cover 2.50x

Equities notable movers

Australia/New Zealand

CBA.AU Confirms AIA to acquire Life Insurance unit for A$3.8B, enters 20-yr partnership with AIA; Undertaking a strategic review of its global asset management business; will consider a range of options, including an IPO; -0.1%

MGC.AU Mongolia Yili Industry Group, a privately-owned Chinese dairy company, made a higher than expected bid with speculation that the bid may be as high as A$1.20/shr – Aussie press; +9.5%

Japan

3064.JP Weakness attributed to report of Amazon starting B2B business in Japan; -5.5%

Taiwan

2498.TW Confirms $1.1B cooperation agreement with Google, where Google will acquire part of HTC engineering team related to Pixel phone

Hong Kong/China

3908.HK Tencent to acquire 4.95% stake; +11.6%

439.HK Subsidiary signs strategic partnership with Xiong’an new area; +9%

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