Focus remains on China and UK outlook appears weaker
Talk is still on China this morning as the yen fell against the dollar and euro for a third day on speculation that China will delay any further strength in the yuan, limiting the benefit to the competitiveness of Japanese exports. However, statements from Asia yesterday attempted to clarify speculation of China’s prospective future moves.
Japanese Finance minister Sadakazu Tanigaki said yesterday at a regular press conference in Tokyo after the Cabinet met stated that “It’s too early to evaluate China’s action…we must closely watch how China manages the currency”.
Li Jen believes currency flexibility is Beijing’s ultimate objective, so as to enhance the ability of the PBOC to be more independent from the Fed’s policy. He thinks the market’s interpretation that China is doing this to help reduce the record US deficit is a gross misunderstanding.
Elsewhere in Asia, Bank of Japan policy makers will probably keep interest rates at almost zero and pump cash into the world’s second biggest economy at the same pace this week as they seek to send seven years of deflation, economists said.
South Korea’s economy grew in Q2 at the fastest pace in more than a year as consumer spending, investment and construction picked up.
Strong housing numbers from the States yesterday highlight the robust economy there, again predicating higher interest rates and more support for the dollar (especially against low yielding currencies such as the JPY).
The dollar also strengthened as the US Conference Board’s index of consumer confidence probably rose this month to 106.2, the highest in 3 years. Figures are released at 3.00pm BST).
On commodities, gold declined from a two-week high before US figure releases this week, eroding the appeal of the metal as an alternative investment.
As predicted, BP Plc, Europe’s biggest oil company, said that Q2 profit surged 29% as prices jumped for crude oil, gasoline and other fuels.
The world’s 70 biggest oil companies are expected to report a net income this year of $230bn, 26% more than last year. The total is almost as big as Poland’s economy!!
In the UK, gilts may advance for a 2nd day as slowing growth in Europe’s second biggest economy increases the appeal of UK government debt. The Confederation of British Industry’s index of factory orders probably rose modestly (out at 11.00 BST) and gilts may offer better value from a risk perspective on the back of this. The pound may fall if speculation is correct that UK factory orders stay near its lowest in more than 18 months however.
Japanese Finance minister Sadakazu Tanigaki said yesterday at a regular press conference in Tokyo after the Cabinet met stated that “It’s too early to evaluate China’s action…we must closely watch how China manages the currency”.
Li Jen believes currency flexibility is Beijing’s ultimate objective, so as to enhance the ability of the PBOC to be more independent from the Fed’s policy. He thinks the market’s interpretation that China is doing this to help reduce the record US deficit is a gross misunderstanding.
Elsewhere in Asia, Bank of Japan policy makers will probably keep interest rates at almost zero and pump cash into the world’s second biggest economy at the same pace this week as they seek to send seven years of deflation, economists said.
South Korea’s economy grew in Q2 at the fastest pace in more than a year as consumer spending, investment and construction picked up.
Strong housing numbers from the States yesterday highlight the robust economy there, again predicating higher interest rates and more support for the dollar (especially against low yielding currencies such as the JPY).
The dollar also strengthened as the US Conference Board’s index of consumer confidence probably rose this month to 106.2, the highest in 3 years. Figures are released at 3.00pm BST).
On commodities, gold declined from a two-week high before US figure releases this week, eroding the appeal of the metal as an alternative investment.
As predicted, BP Plc, Europe’s biggest oil company, said that Q2 profit surged 29% as prices jumped for crude oil, gasoline and other fuels.
The world’s 70 biggest oil companies are expected to report a net income this year of $230bn, 26% more than last year. The total is almost as big as Poland’s economy!!
In the UK, gilts may advance for a 2nd day as slowing growth in Europe’s second biggest economy increases the appeal of UK government debt. The Confederation of British Industry’s index of factory orders probably rose modestly (out at 11.00 BST) and gilts may offer better value from a risk perspective on the back of this. The pound may fall if speculation is correct that UK factory orders stay near its lowest in more than 18 months however.
posted by Drs Search @ 7:38 AM
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