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RANsquawk EU Open Rundown 08.08.17

Asian equities traded mostly lower with focus on Chinese trade data which showed exports and imports falling short of expectations

USD traded subdued to marginally benefit its major counterparts in which EUR/USD gained a footing on 1.1800

Looking ahead, highlights include US JOLTS and APIs

ASIA

Asian equity markets failed to sustain the momentum from the record closes seen in DJIA and S&P 500, as sentiment in the region soured amid relatively quiet news flow and as participants digested the latest Chinese trade data. ASX 200 (-0.6%) and Nikkei 225 (-0.3%) saw early selling pressure, with the Australian market the underperformer on broad based declines, aside from the mining sector which remained resilient after continued gains in iron ore prices. Hang Seng (Unch.) and Shanghai Comp (-0.2%) were also subdued after Chinese Imports and Exports both missed estimates, while regulatory concerns also persisted with the PBoC seeking to tighten fintech rules to prevent risks. 10yr JGBs were flat as demand failed to garner support from the deterioration of risk tone in the region, while the 30yr auction was also uneventful with the results relatively in-line with the previous month.

Chinese Trade Balance (CNY) (Jul) 321.2bln vs. Exp. 293.55bln (Prev. 294.30bln). (Newswires)

Chinese Exports (CNY) (Jul) Y/Y 11.2% vs. Exp. 14.8% (Prev. 17.3%)

Chinese Imports (CNY) (Jul) Y/Y 14.7% vs. Exp. 22.6% (Prev. 23.1%)

Chinese Balance of Trade (USD) (Jul) 46.70bln vs. Exp. 45.00bln (Prev. 42.75bln). (Newswires)

Chinese Exports (USD) (Jul) Y/Y 7.2% vs. Exp. 11.0% (Prev. 11.3%)

Chinese Imports (USD) (Jul) Y/Y 11.0% vs. Exp. 18.0% (Prev. 17.2%)

PBoC injected CNY 70bln in 7-day reverse repos and CNY 70bln in 14-day reverse repos. (Newswires)

PBoC set CNY mid-point 6.7184 at (Prev. 6.7228)

EUROPE/UK

UK BRC Retail Sales Like-For-Like(Jul) Y/Y 0.9% vs. Exp. 0.9% (Prev. 1.2%). (Newswires)

FX

USD traded subdued to marginally benefit its major counterparts in which EUR/USD gained a footing on 1.1800, while GBP/USD tested 1.3050 to the upside. AUD was initially underpinned after a stronger NAB Business Confidence, as well as further upside in AUD/NZD. However, gains in AUD/USD were later pared following the disappointing Chinese Imports and Exports data. USD/JPY was pressured on safe heaven flows, and USD/CNH briefly slipped below the 6.7000 level for the 1st time since October last year after the PBoC strengthened its reference rate, which also contributed to the USD-woes.

COMMODITIES

Copper prices weakened overnight following Chinese trade data, coupled with an overall dampened risk tone in the region. Mild safe-haven flows and subdued greenback translated to minor gains in gold (+0.2%) with the precious metal now around 1260.00/oz level, while WTI crude futures traded lacklustre with prices contained in a tight range tspanoughout the session.

Australia July Port Hedland iron ore exports fell to 37.9mln tonnes vs. Prev. 43.1mln tonnes. (Newswires)

China Commodities Trade Data showed July YTD copper and product imports fell 15.2% Y/Y to 2.62mln tonnes. (Newswires)

- July YTD iron ore imports rose 7.5% Y/Y to 625mln tonnes.

- July YTD oil products imports fell 1.0% Y/Y to 17.38mln tonnes.

- July YTD steel products exports fell 28.7% Y/Y to 47.95mln tonnes.

US

Treasuries garnered support after a large block buyer of 10s stepped into the fold (again) in early Chicago trade, although long end corporate supply lead to 30s underperforming, and some very minimal bull steepening in the 5s30s space. Sep’17 10y T-note futures settled at 126.05+, up 3 ticks.

Fed's Kashkari (Voter, Dove) said the US economy is doing pretty well overall and that US hasn't seen wages grow very quickly. (Newswires)

Fed's Bullard (Non-Voter, Dove) stated that the Fed's current policy is likely to remain appropriate in the near-term and reiterated he sees September as an appropriate time to begin trimming the Fed's balance sheet. (Newswires)
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