· Asian stock markets: Nikkei rose 0.97 %, Shanghai Composite rose 1.68%, Hang Seng gained 0.08 %, ASX200 fell -0.21%
· Commodities: Gold at $1137.70 (-0.24 %), Silver at $14.63 (-0.18 %), WTI Oil at $39.37(+0.15%), Brent Oil at $43.19 (-0.05 %)
· Rates: US 10 year yield at 2.08% UK 10 year yield at 1.91, German 10 year yield at 0.73
· China Westpac-MNI Consumer Sentiment (Aug): 116.5 (prev 114.5)
· China Raises Margin Requirements On Index Futures & To Restrict Positions – RTRS
· PBoC Chief Economist Ma: Monetary Policy Remains Prudent & Neutral — Xinhua -Financial Market Volatility May Affect Economy.
· Ma: Rate Cut Stabilises Expectations At Home & Abroad -Foundation Of Economic Recovery Not Solid
· The People's Bank of China announced on its website that it was reducing lending and deposit interest rates by 0.25 percentage points each and its reserve requirement ratio by 0.50 percentage points. The moves take effect Wednesday, it said. This is the fifth rate cut announced by China since November 2014.
· Ma: Commodity Slump Will Pressure Price Growth Leading To Higher Real Interest Rates
· Australian PM Abbott: Turbulence In Markets Due To Over-Exuberance In China – BBG
· Stevens: Growth Cannot Just Come From Interest Rate Adjustments – MNI
· Indian Rupee posts biggest 1 day gain in 2015 on China Rate Cut
Markets are in the mode of global risk aversion, where safe-haven currencies such as the yen are bid as a flight to safety. Risk assets such as US equity indices have sold off heavily across the past two weeks of trading. With the yen still acting as a strong proxy to global risk appetite, the USDJPY pair has fallen to lows of 116.184 on Monday’s trading. USD/JPY has since recovered, with spot currently trading at 119.15, as fears ease mildly with China’s decision to cut interest rates.
The bout of risk aversion has also brought major currency pairs such as the EURUSD rising, as market participants heavily cover thematic long-USD positions off of the pretext of monetary policy divergence. The EUR/USD has pared back gains as well from its highs of 1.1715 to the current spot price of 1.1508. The pair broke through key resistance printed at mid-may and mid-June highs 1.1440. Unlike the aforementioned pairs, cable has been relatively inactive in response to global volatility and is trading steady at 1.5070.
Commodity Currencies update: With Australia having strong sensitivity to sentiment surrounding China, the Aussie currency pair has also suffered, falling on Monday to a low of 0.7040. Tuesday’s trading has seen the AUD/USD retest broken support at 0.7230, and has seen the pair trading lower to the current spot price of 0.7133. The extent of selling that the AUD has been subject to was not seen in the Kiwi, where a sharp spike lower to 0.6121, has been aggressively faded, with spot trading back at 0.6500 currently,
· 13:30 BST – US Core Durable Goods Orders m/m, Durable Goods Orders m/m,
· 15:00 BST – FOMC Member Dudley Speech
· 15:30 BST – Crude Oil Inventories
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