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July 11th - Industry insiders stated that historically, during periods of high demand in the memory chip industry, manufacturers tend to simultaneously expand production capacity, leading to a concentrated release of new capacity, a price crash, and industry-wide losses. Subsequently, manufacturers collectively reduce capital expenditures, and when demand recovers, another boom occurs – this cycle constitutes the industrys unique cyclical pattern. Since reaching its peak in late June, US memory chip stocks have experienced a collective correction due to concerns about overcapacity, triggered by news such as Metas sale of computing power. Data shows that industry leaders such as SanDisk, Micron Technology, Seagate Technology, and Western Digital have all seen their stock prices fall by more than 20% in the past few weeks. Analysts point out that the underlying logic supporting current demand for memory chips is facing a reassessment, with the core variable being whether the technological gap between various AI large-scale models will continue to narrow. Analysts also pointed out that the memory chip industry is undergoing a profound change in its business model: in the past, memory was more like a commodity, with prices fluctuating with the market, and contracts were mostly on a quarterly or annual basis; now, cloud vendors and AI data centers are increasingly signing long-term supply agreements with original equipment manufacturers for three to five years, with price ranges, minimum purchase quantities, and customer deposits, in order to ensure critical supply.July 11th - Typhoon Bavi, the ninth typhoon of the year, is expected to impact eastern Hubei, Jiangxi, and Anhui provinces along the middle and lower reaches of the Yangtze River from July 11th to 13th. According to the Yangtze River Maritime Safety Administration, to ensure typhoon safety, following the requirements of "early assessment, early warning, early deployment, early inspection, and early evacuation," the administration raised the typhoon emergency response level for the Anhui-Sichuan section of the Yangtze River main channel to Level II at 18:00 on July 11th.July 11 – The European Union is developing a “solidarity tool” to support businesses in shifting supplies of critical goods and to cushion the impact of trade conflicts. According to sources, this tool requires funding, and member states are currently negotiating the EU’s next multi-year budget. The exact amount needed is unclear, but given the size of the industries and trade involved, the funding requirements are likely substantial. Some member states are currently pushing for spending cuts. The tool was developed by the EU’s executive body. Sources indicate that national envoys have been briefed on the tool this week.The China Earthquake Networks Center officially determined that a magnitude 3.3 earthquake occurred at 19:14 on July 11 in Eryuan County, Dali Prefecture, Yunnan Province (26.12 degrees north latitude, 99.86 degrees east longitude), with a focal depth of 11 kilometers.Russian Deputy Prime Minister: We will begin importing petroleum products this month.

Despite growing chances of BOE-BOJ policy divergence, the GBP/JPY exchange rate is falling toward 162.00

Daniel Rogers

Sep 22, 2022 15:05

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The pound to yen exchange rate has given up the key support level of 162.20 during the Asian session and is now slowly descending toward the 162.00 level. Since breaking down below the consolidation range formed between 162.80-164.47, the asset has been trending downwards. The cross has been trending downwards despite growing expectations of further growth in policy divergence between the Bank of England (BOE) and the Bank of Japan (BOJ).

 

British households are facing headwinds due to price pressures inside the British economy. The latter is obligatory in order to provide dividends that are adjusted for inflation and yield a net gain of one cent per year. The current state of the labor market, GDP forecasts, and energy costs all argue against a rate hike by the BOE. Although unpleasant, the Governor of the Bank of England (BOE) must bite the bullet and announce a rate increase of 50 basis points (bps).

 

Some of Liz Truss's economic measures, such as her announcement of a reduction in tax brackets, an energy and electricity cost ceiling, and a trade pact with the United States, look to be beneficial to the economy. The pound bulls aren't getting stronger despite this.

 

As a result of the BOJ's reluctance to intervene in the currency market, the Japanese yen has risen on the Tokyo financial scene. It has been reported by Bloomberg news wires that Japan's former vice foreign minister, Tatsuo Yamasaki, has said that the Japanese government is prepared to intervene in the currency markets at any time. The yen doesn't need America's blessing, he said, so the government won't be changing it.

 

Given the continued need to monitor the economy's growth prospects and inflation drivers, it is expected that the BOJ would maintain a "neutral" stance on monetary policy. The policy gap between the BOE and BOJ will widen as a result.

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