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The Peoples Bank of China (PBOC) announced today that it conducted 15 billion yuan of 7-day reverse repurchase operations, with both the bid and winning bids amounting to 15 billion yuan. The operating rate was 1.40%, unchanged from the previous rate.July 8th - Bank of Japan (BOJ) loan growth in June hit its fastest pace since the COVID-19 pandemic, indicating that credit channels remain open and the BOJ still has room to raise interest rates further. According to a report released by the BOJ on Wednesday, seasonally adjusted bank loans excluding trusts rose 6.3% year-on-year in June, the strongest growth since August 2020. The BOJ stated that the growth was mainly driven by loans related to mergers and acquisitions, real estate, and economic recovery. These figures reinforce the BOJs assessment that financial conditions remain accommodative even after Governor Kazuo Ueda raised the benchmark interest rate to its highest level since 1995 last month. While the latest loan data may not yet reflect the impact of the June rate hike, policymakers have repeatedly cited financial conditions as a key indicator for assessing whether further rate hikes are warranted. Strong loan demand suggests that higher borrowing costs have not dampened business investment or household activity, strengthening the argument that the economy can withstand further policy normalization. This is consistent with the BOJs latest Tankan survey, in which the corporate financial conditions index improved for the first time in a year. Large companies reported an improved environment for commercial paper issuance.Reserve Bank of Australia Assistant Governor Hunt: Some economic costs are unavoidable, and all policymakers can do is seek a balance.On July 8, the Institute of Marine Development Strategy of the Ministry of Natural Resources released the Chinese and English versions of "A Historical and Legal Critique of the Philippines Territorial Claims in the South China Sea." The report reviews and analyzes the formation process of the Philippines territorial boundaries, examines its intentions and practices in expanding its territory, and concludes that the Philippines attempt to break through the territorial boundaries defined by a series of treaties with international legal force, and to expand its territory to Scarborough Shoal and parts of the Spratly Islands, lacks basic historical basis, clearly violates the rules of international law concerning territorial acquisition, and has no historical or legal foundation. This is the first time a Chinese think tank has comprehensively assessed and systematically critiqued the Philippines territorial claims.The main contract for the container shipping index (European route) has extended its intraday gains to 3.00%, currently trading at 2532.0 points.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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