Related insights
USD is weighed by a sell-off in semiconductor stocks and the resultant sharp decline in US yields, with the DXY hovering at 102. Warsh’s fireside chat today would be the next driver, with markets keen to hear his views on the Fed’s likely response to tighter financial conditions, and his assessment of the US inflation picture. Market expectations for two more Fed hikes by March 2027 are still unchanged despite a sticky core CPI read on Wednesday, and a hawkish tilt from Warsh may well lift the USD.
RMB has remained stable despite market volatility, with USD/CNH easing to 6.69. A risk to watch is China-EU trade relations, with the EU announcing yesterday that it is assessing additional sectors to impose China trade quotas. This follows an agreement last Friday to introduce quotas on China’s hybrid vehicles exports to the EU. EU leaders are also reportedly supportive of a French-German proposal for a mechanism that would rapidly shut Chinese companies out of the EU market, if China engages in serious, trade-distorting behavior. Given major trading partners’ discomfort with RMB undervaluation and trade competitiveness, China could continue to allow gradual RMB appreciation.
USD/JPY has inched back towards 158, after slipping towards mid-157 levels following a decline in US yields. The JPY has lagged the CHF in returns month-to-date, indicating its diminished haven allure amid an equity market sell-off. Finance Minister Katayama continues to ward off JPY shorts with rhetoric, saying yesterday that Japan won’t hesitate to act on FX if needed. BOJ’s Koeda was also on the wires, saying that the Bank should not be overly cautious in raising rates given considerable upside risks to prices. Her stance contrasts with the BOJ’s September Summary of Opinions indicating caution by some board members, and the Board’s divided opinions on the pace of rate hikes could keep JPY range-bound for now.
Quote of the Day
“Politics is war without bloodshed while war is politics with bloodshed.”
Mao Zedong
Today in history
On October 16, 1934, Communist leader Mao Zedong led his followers on a 6000 mile “Long March” from southeastern to northwestern China.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates, Digital Assets or Commodities)[1]
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
[1] This disclaimer may not apply if the applicable assets fall within the definition of 'financial instruments' that are set out in Article 2(1) EU MAR (e.g. financial instruments that are traded on a regulated market, MTF or OTF, etc.). Section C of Annex I of MiFID2 specifies these 'financial instruments'.