Week in FX ASIA China Growth Slows Down

China’s manufacturing is inline to contract at a faster pace than expected. Demand for Chinese good has slowed down and even though production has not contracted at the same pace it is expected to wind down. This slowdown has impacted the Australian Economy as China is the largest trading partner to the resource heavy nation. Australian exports have suffered and mining and other resource projects have been put on hold. The Australian Resources Minister has said in an interview: “The resources boom is over”

House ownership rules have ignited some complaints as China tries to cool down the housing market. The Chinese authorities are restricting purchases of dwellings and in some cases limiting the number of properties that residents can own. This has met with protest from non-residents of cities such as Shanghai where non-residents can only own one dwelling, but some have cited marriage and future family members as a reason to buy a 2nd residence.

Below are some other highlights of the week:

ASIA

• CNY: China’s new-home prices rose in 49 of the 70 cities in July after interest rate cuts and incentives for first-time buyers. That was the most since May last year and up from 25 cities in June.
• China Home Sales fall in August versus July | OANDA Forex Blog
• China central bank dismisses reports of lost gold reserves | OANDA Forex Blog
• CNY: In the Shanghai Securities News it was reported that China may expand a property tax trial and raise the “threshold” for home pre-sales if housing prices rebound too fast.
• NZD: Kiwi performance of services index eased to 53.1 in July, from a downwardly revised 53.9 in June.
• AUD: The lack of commentary on AUD strength in the RBA minutes was the catalyst for their domestic currency. Analysts noted that the minutes for the most part rehashed the Governor Stevens current stance on monetary policy, without adding any new comments on the currency’s ongoing strength in spite of the deterioration in Australia’s terms of trade and the slowdown in several of its trading partners.
• AUD: The RBA provided a surprisingly upbeat assessment of the state of the mining sector, noting that the “several large resource projects have begun or received approval in recent months, thereby sustaining the very large stock of the work in the pipeline”. Rates markets were not too impressed by the content of the minutes and remain more firmly focused on today’s testimony of Governor Stevens.
• RBA MPC Minutes Aug 7 | OANDA Forex Blog
• Australian Dollar Gains Against Majors After RBA Minutes | OANDA Forex Blog
• NZD: Kiwi permanent departures exceeded arrivals by -660 (s.a) in July, compared with a revised 520 more arrivals than departures in June.
• NZD: Kiwi credit card spending fell -1.5%, m/m (s.a) in July, compared with a revised +0.7% increase in Jun. On a yearly basis, it rose to +0.1% July, following a +3.9% rise in June.
• JPY: Japan recorded a trade deficit of -JPY0.5b in July, down from a small surplus in June, and weaker than consensus expectations for a -JPY0.27b deficit. Analysts note that poor exports of general machinery and transport were the main driver of the deterioration in the trade balance.
• Yen Traders Comment on BoJ Price Target | OANDA Forex Blog
• AUD: Aussie Westpac Leading Index increased +0.5% in June, following an upwardly revised +0.9% rise in May.
• AUD: Aussie internet job vacancies fell -3.1%, m/m in July, compared with a -2.5% fall in June.
• CNY: China’s HSBC Flash manufacturing PMI fell to 47.8 in August, its lowest level since November 2011, down from 49.3 in July. Analysts note that the mix is also worrying with new export orders lower at 44.7 from 48.2 in July, the worst since March 2009.
• China Increases Local Oil Output as Consumption Grows | OANDA Forex Blog
• China Factory Data Suggest Economy Yet to Bottom | OANDA Forex Blog
• SGD: Singapore inflation fell to +4.0%, y/y in July from +5.3% in June, well below expectations for +4.5%. Analysts note that much of the drop came from lower quota costs for cars on the month.
• AUD: Aussie’s CBAHIA house affordability Index rose to 62.5 in Q2, from 61.8 in Q1.
• China National Offshore Oil Co. Cuts Dividend to Pay for Nexxen Acquisition | OANDA Forex Blog
• Analysts Divided on Yuan Forecast | OANDA Forex Blog
• Asian Banks Could Cut US Ties as Dodd-Frank Derivatives Rules Approach | OANDA Forex Blog

EUROPE Week in FX

AMERICAS Week in FX

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