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On July 3rd, the Hainan Provincial Housing Provident Fund Management Bureau issued a notice regarding the withdrawal of housing provident funds to pay property management fees. The notice clarifies that contributors can apply to withdraw their housing provident funds once a year to pay property management fees for any owner-occupied residential property under their familys name in Hainan Province. Owner-occupied residential properties do not include self-built houses, shops, office buildings, or commercial properties such as timeshare hotel rooms. It is worth noting that if the contributors family has an outstanding housing provident fund loan in Hainan Province, the combined balance of the contributors and their spouses accounts after applying for the property management fee withdrawal must be sufficient to repay three months of the loan.July 3 – Allianz Chief Economist Ludovic Subran stated, “The US non-farm payroll data was actually weak, but I still believe inflation will peak above 3.7%, and artificial intelligence, fiscal stimulus, and the energy sector continue to support economic growth. The Fed may have to raise rates in September. I think this is the real point of contention between the US and Europe.” Subran believes that the European Central Bank will not take further action after last months rate hike. “That was an insurance-style rate hike, but judging from the current data, it seems to be over,” he said. “The traumatic effects of the (Iranian) war will take time to manifest; the economy is still bearing the costs of the war, but the situation is much better now than it was a few weeks ago.”NATOs Deputy Supreme Allied Commander Europe: Europe has increased its investment. Europe is filling the gaps left by the US repositioning its troops.The Houthi rebels in Yemen stated that if Saudi Arabia launches further attacks, it will "face attacks targeting Saudi airports and other vital objectives."July 3 - A Bloomberg survey shows that OPEC member countries have resumed oil exports via the Strait of Hormuz following the US-Iran peace agreement. The survey indicates that OPECs oil production increased by 2.34 million barrels per day in June, reaching 18.75 million barrels per day, with Kuwait, Saudi Arabia, and Iran showing the most significant increases. Despite the recovery, production remains far below pre-war levels. Even before the peace agreement, Persian Gulf oil-producing countries had found ways to secretly transport goods through the Strait of Hormuz. In the early stages of the conflict, the strait was almost completely closed. With the US-Iran agreement allowing more overt transit, tanker tracking data shows that Saudi oil shipments have recovered to 90% of normal levels. Following the UAEs withdrawal from OPEC, the organizations June production was still 7.3 million barrels per day lower than February levels, a decrease of 28%.

USD/JPY continues Powell-led declines to fresh 14-week low, BOJ's Kuroda, and US PCE Inflation in the horizon

Daniel Rogers

Dec 01, 2022 15:22

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As Tokyo opens on Thursday, USD/JPY bears take advantage of the weakening US Dollar to mark the lowest level in more than three months near 137.30. In addition to falling US Treasury bond yields and a risk-on market mentality, the recent depreciation of the Yen could be attributed to a weaker yen.

 

Fed Chair Jerome Powell made his first public appearance since the November Federal Open Market Committee (FOMC) meeting by speaking at the Brookings Institution about the economic outlook, inflation, and employment. The official noted that it makes sense to reduce the rate of interest rate increases and speculated that this might occur as soon as the December meeting. Lisa D. Cook, a member of the Federal Reserve Board of Governors, praised the inflation figures as evidence that the Fed will likely take fewer steps in the future.

 

Following Powell's speech, market bets supporting a 50 basis point (bps) rate hike by the Federal Reserve in December increased from 69.9% prior to the speech to over 75%, resulting in a depreciation of the US Dollar and a rise in Treasury yields, while equities appreciated.

 

As a result, the US Dollar Index (DXY) shattered a three-day uptrend on Wednesday, exhibiting the steepest daily fall in a week and the largest monthly decline in 12 years. Notable is the fact that Wall Street benchmarks responded favourably to Fed Chair Yellen's dovish remarks, while 10-year Treasury bond yields reversed early gains to end November on a negative note near 3.61 percent.

 

In addition to Fedspeak, the poor US statistics and optimism on China's Covid situation also weighed on USD/JPY prices. Among these, the US ADP Employment Change received the most attention, as its November result of 127K constituted the lowest readings since January 2021, compared to the 200K expected and 239K previous results. In addition, China reported just over 38,000 daily cases of Coronavirus on Tuesday, which was reported on Wednesday, indicating the second consecutive day of declining virus levels after the record high was updated. The gradual easing of virus-driven activity restrictions in major cities such as Zhengzhou, Guangzhou, and Chongqing looked to have favored Yen pair sellers.

 

Moving forward, the Fed's favored inflation measure, namely the US Core Personal Consumption Expenditure (PCE) Price Index for October, which is forecasted to increase to 5.0% YoY in October from 5.1% in September, will be key for near-term USD/JPY fluctuations. The US ISM Manufacturing PMI for November will also be significant, with a predicted reading of 49.8 compared to 50.2 earlier. Recent rumors regarding the possible tightening of monetary policy by the Bank of Japan (BOJ) in 2023 are the focal point of Governor Haruhiko Kuroda's address today.


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