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MNI China Daily Summary: Wednesday, Aug 21

MNI: PBOC Net Drains CNY111.2 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Lower At 7.1307 Weds; +2.41% Y/Y

CHINA PBOC CONDUCTS CNY258 BILLION VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1307 WEDS VS 7.1325

MNI: CANADA JUL INDUSTRIAL PRICES +0.0% MOM; EX-ENERGY -0.2%

US MBA: REFIS -15% SA; PURCH INDEX -5% SA THRU AUG 16 WK

MNI: US MBA: MARKET COMPOSITE -10.1% SA THRU AUG 16 WK

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

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Softer Greenback, CAD and NOK Outperform As Crude Prices Surge

FOREX
  • Both the Canadian dollar and the Norwegian Krona were the main G10 beneficiaries on Tuesday as buoyant commodity prices underpinned demand.
  • Crude oil futures have risen well over 3% and both WTI and Brent are currently testing the October highs, providing some fresh impetus for CAD and NOK bulls.
  • USDCAD has made headway below the 1.26 handle, marking the fourth consecutive session of lower lows for the pair. A clear break of both 1.2621 as well as 1.2608 (Dec8 low) strengthens the bearish case to initially target 1.2546 (61.8% retracement of the Oct - Dec rally).
  • Overall, the US dollar has weakened amid the improving global risk sentiment. The dollar index (DXY) has fallen 0.4% and is within close proximity of the late November lows around 95.50 as we approach tomorrows CPI data.
  • The greenback weakness comes in the face of growing sell-side adjustments to Fed rate hike expectations with several analysts now predicting four hikes in 2022.
  • EURUSD, GBPUSD and NZDUSD have all moved in line with the weaker dollar and AUDUSD (+0.6%) has edged back above the 0.72 handle and traders will eye a potential close above the 50-day MA which intersects at 0.7216. Key short-term resistance is unchanged at 0.7278, the Dec 31 high.
  • The weaker dollar and firmer equity/commodity markets provided a strong environment for emerging market FX. The South African Rand gained close to one percent, however, the major gains were seen in LatAm with both the BRL and COP surging around 1.5%.
  • Chinese CPI/PPI is scheduled overnight before the week’s main event of US CPI will be released at 1330GMT/0830ET.

Energy BulletsCommodities
Energy BulletsCommodities

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