MNI China Daily Summary: Thursday, March 13

MNI BRIEF: China Has Been In Communication With U.S. On Trade

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MNI INTERVIEW2: Policy Lag Justifies Faster CNB Easing - Holub

MNI BRIEF: China Consumer Satisfaction Up

MNI: PBOC Net Drains CNY68.6 Bln via OMO Thursday

EZ/UK Bond Supply Calendar: SlovGB Auction Monday

US EIA:NAT GAS STORAGE -62 BCF TO 1,698 BCF MAR 07 WK

MNI: US FEB FINAL DEMAND PPI +0.0%, EX FOOD, ENERGY -0.1%

GERMANY: Union/SPD Migration Alignment After Turmoil Threatened Debt Deal (BILD)

GERMANY: Official Interim Election Results Tilt Towards Missing BSW & FDP

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FOREX: Aussie Weakness Standing Out, AUDJPY Bearish Theme Intact

FOREX
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  • Equity sentiment turned more risk averse as the Thursday Asia Pac session unfolded. Eminis are under pressure, while Hong Kong markets track lower for the 5th straight session. These dynamics have weighed on the likes of AUD and NZD overnight, comfortably the weakest in G10.
  • Notably, the Melbourne Institute’s consumer inflation expectations reversed sharply lower in March with a 1pp decline to 3.6%. This was the lowest reading since Covid-impacted August 2021 and is now down around 3pp from June 2022’s peak, assisting the bearish AUD sentiment.
  • A firmer Japanese Yen on Thursday has seen AUDJPY fall ~0.6% today, and the ongoing weakness/volatility in equity markets will keep this cross firmly in the spotlight in coming weeks. Both 20- and 50-day EMAs have acted as strong resistance, and the cross has spent March consolidating comfortably below the 95.00 handle, keeping a bearish threat at the fore. Two lows at 91.86 provide initial support, of which a breach would target a move to the carry unwind lows around 90.00 from August last year.
  • A reminder that Goldman Sachs reiterated recently that softer activity data out of the US makes being short AUDJPY the best trade as it typically sees among the greatest returns in a backdrop of lower equities and lower yields.
  • Rising chances of a US government shutdown on Saturday also increase the uncertainty surrounding the US economy, which keeps the AUDJPY downside vulnerable at this juncture. Immediate attention is on US PPI later today as many core PPI components feed into the Fed’s preferred measure of core PCE. 
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  • Equity sentiment turned more risk averse as the Thursday Asia Pac session unfolded. Eminis are under pressure, while Hong Kong markets track lower for the 5th straight session. These dynamics have weighed on the likes of AUD and NZD overnight, comfortably the weakest in G10.
  • Notably, the Melbourne Institute’s consumer inflation expectations reversed sharply lower in March with a 1pp decline to 3.6%. This was the lowest reading since Covid-impacted August 2021 and is now down around 3pp from June 2022’s peak, assisting the bearish AUD sentiment.
  • A firmer Japanese Yen on Thursday has seen AUDJPY fall ~0.6% today, and the ongoing weakness/volatility in equity markets will keep this cross firmly in the spotlight in coming weeks. Both 20- and 50-day EMAs have acted as strong resistance, and the cross has spent March consolidating comfortably below the 95.00 handle, keeping a bearish threat at the fore. Two lows at 91.86 provide initial support, of which a breach would target a move to the carry unwind lows around 90.00 from August last year.
  • A reminder that Goldman Sachs reiterated recently that softer activity data out of the US makes being short AUDJPY the best trade as it typically sees among the greatest returns in a backdrop of lower equities and lower yields.
  • Rising chances of a US government shutdown on Saturday also increase the uncertainty surrounding the US economy, which keeps the AUDJPY downside vulnerable at this juncture. Immediate attention is on US PPI later today as many core PPI components feed into the Fed’s preferred measure of core PCE.