MNI China Daily Summary: Monday, July 1

MNI BRIEF: PBOC To Borrow CGBs In Response To Market Situation

MNI BRIEF: Caixin June Manufacturing PMI Hits Three-year High

MNI: PBOC Net Drains CNY48 Bln Via OMO Mon; Rates Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS MON

US JUNE MANUFACTURING PMI 51.6 (51.7 FLASH, 51.3 MAY)

Sequential Inflation Momentum Appeared To Slow In June

HICP Steady As Expected; CPI Ticks Lower As State Data Indicated

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Overall Greenback Pressure Extends, GBPUSD Above 1.2600

FOREX
  • Equity markets have continued to edge higher this week which has continued to weigh on the greenback overall, with the USD index set to decline around 0.5% since last Friday’s close. The softer-than-expected US CPI earlier this month continues to bolster the renewed bearish theme for the USD.
  • Gains on Friday have been broad based, however, the more risk sensitive ccys such as GBP, AUD and NZD have outperformed, potentially using the Israel/HAMAS developments as positive at the margin.
  • GBPUSD's rally today puts spot clear of most notable options interest rolling off across the coming week, with markets looking to gauge the recent shift in BoE rate expectations across 2024, after the Autumn Statement prompted pricing (and a handful of sell-side analysts) to push back expectations for the first rate cut next year well into Q3. Close to $4bln rolls off across the Monday-Friday cuts next week between 1.2250-1.2500, and with few UK data releases, focus will be on a slew of central bank speakers.
  • 1.2589 resistance has been cleared on today's rally (50% of the Jul 14 - Oct 4 bear leg). A close at current or higher levels makes 1.2686 and 1.2720 the next key topside levels of note.
  • Elsewhere, AUDUSD touched multi-month highs during today’s session. The trend needle continues to point north, and the latest rally has resulted in a clear break of former resistance at 0.6522, the Aug 30 and Sep 1 high. This reinforces the bullish theme and signals scope for a continuation higher near-term towards 0.6616 next, the Oct 8 high.
  • Bucking the trend this week has been the Japanese Yen which, although remaining unchanged on the week, has had a strong bounce from the 147.15 Tuesday low to trade back around 149.50 as we approach the close.
  • Highlights on the calendar next week include, Australia and European CPI data, the RBNZ meeting, US growth data and the rescheduled OPEC+ meeting.
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