Ranges (Up Till 11.35am HKT) : Currency Currency

Ranges (Up till 11.
35am HKT)
Currency
Currency
EURUSD
1.1525-1.1623
EURJPY
137.12-138.59
USDJPY
118.25-120.11
EURGBP
0.73165-625
GBPUSD
1.5720-77
USDSGD
1.4047-1.4110
USDCHF
AUDUSD
0.9306-76
0.7131-0.7234
USDTHB
USDKRW
35.53-70
1191.1-1198.0
NZDUSD
0.6440-0.6540
USDTWD
32.646-33.00
USDCAD
1.3246-92
USDCNH
6.4670-6.5065
AUDNZD
1.1055-1.1125
XAU
1152-1156.3
Key Headlines
It felt different today. Risk appetite returned in midmorning and decided to stay on. Yes, Shanghai is in red
but a lot better than when it opened.
Equities started in negative and it was the All Ords that
first turned around. At one point, Nikkei 225 was down
4%, this ended morning +1.1%.
With things turning, there was no reason to like Euro
We heard chatter of Asian sovereign names selling
Aussie bonds this morning. Not one, not two, but few of
them doing at same time. This could spill into UST.
FX Flows
Maybe a global concerted effort to stem this pain.
Ambrose Evans-Pritchard in The Telegraph said Fed
cannot cut rates this time, but it can issue a clear signal
that it plans to delay rate rises.
Whole world is now looking to further Chinese action,
RRR cut. Even Japanese hope that the Chinese
authorities will take appropriate action to stabilize the
economy. If they do, a 50bp cut will be deemed to small
those China experts will condemn mainland. Anything
bigger, they will say the Chinese are now panicking.
Nikkei opens down 2%; UsdJpy was paid up by Japanese
initially to 119.08 got sold off back to 118.70s. Tokyo
names bought UsdJpy again some chatter of demand
from Japanese retail and also some linked it to Goto-bi
Day. Japanese officials spoke this morning. Amari and
Aso hoping Chinese will so something. UsdJpy
continued to climb, Nikkei turned positive. This led
market to believe it is the doing of the public pension
fund.
If you recall, Aug 11, Masahiro Kawai, ally to BOJ
Governor Kuroda said BOJ next move is more likely to
be an expansion in monetary stimulus than a reduction.
Then on Aug 17, Nikkei carried an article featuring the
meeting between Kuroda and PM Abe. I would look for
these BOJ meetings Sept 15, Oct 7 and Oct 30.
Reading one global positioning index, the strategic

funds are maximum short UsdJpy. There will be carnage
if 122.00 goes.
New Yorkers left the EurUsd at 1.1610: Asia took the pair
down to 1.15445, triggered weak stops near 1.1550-60. As
risk returned, let to profit taking. Euro sold versus Usd,
Aud, Nzd and Gbp. Of course, versus Asian currencies as
well. Keep an eye on this option expiry, Aug 31 strike at
1.0900, worth Eur5bn.
So not a surprise, Aud and Nzd both ended the morning
higher.
Platform names were busily buying UsdCad early this
morning, took the pair up to 1.3292. Towards the late
morning, risk put back on, oil futures positive and
UsdCad bumped to 1.3249.
Asians
Would you believe UsdMyr NDF is discount versus the
onshore spot? It is indeed. Onshore, which has been
trading lower than offshore NDF has gone bonkers. Part
of the reason, in my opinion, Malaysian bond holders
have in the past long NDF as hedge. As spot breaks
higher, hedging increased. With bonds being liquidated,
these asset managers will have to buy spot, which caused
market higher. Then they will unwind the offshore NDF
hedges, so sell NDF.
Usd/Asia all softer as calm returned. Yes, Shanghai is in
red but a lot better than when it opened.
Who said what

Brazil Tombini: Currency moves a challenge for
monetary policy
Japan Amari: Jpy being bought as safe haven asset
Japan Amari: Chinese stocks were a bubble
Japan Amari: Expects Chinese authorities to calmly
take steps to manage their economy
Japan Aso: Hopes Chinese authorities will take
appropriate action to stabilize the economy
Australia Abbott: Australian economic fundamentals
are sound
Australia
Abbott:
Australians
should
not
hyperventilate over stocks
PM Abe Adviser Hamada: Oil Prices Not Enough for
More BOJ Easing
News & Data

Australia ANZ Roy Morgan Consumer Confidence
Index at 113.0 from 113.2
New Zealand Q3 2-Y Inflation Expectations at 1.94%
from 1.85%
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.
WSJ: Hedge Funds Ready to Ride Out Stock

Turmoil
Hedge-fund managers are in a buying mood. Despite
getting battered in recent days along with the rest of the
investing world, many of these highly paid traders say
they are convinced this latest turn will be much like
many others since the crisis: a harrowing fall, and a
rapid comeback. Youve got to be not emotional about
it, said Rob Hays, chief investment officer of Dallas
hedge fund Ashford Investment Management. He noted
that trouble abroad often actually buoys U.S. assets such
as real estate. Everything on the ground shows this is
not a turn.
http://www.wsj.com/articles/hedge-funds-ready-toride-out-stock-turmoil-1440458823?
mod=wsj_nview_latest
FastFT: China's latest export: roller-coasters
Analysts at Capital Economics warned that global panic
about China is overdone, noting: The collapse of the
equity bubble tells us next to nothing about the state of
China's economy. In fact, recent data have been more
positive than the headlines might suggest, with large
parts of the economy still looking strong. China also have
the luxury of still being able to loosen policy if necessary.
http://www.ft.com/intl/fastft/381281
WSJ: China Aftershocks Could Stay Feds Hand
China picked a momentous moment to squander
decades of investor goodwill and ignite a ferocious global
selloff. For the Federal Reserve, the aftershocks threaten
to set back its path to interest-rate normality yet again
and the delay could be longer than investors suspect. For
U.S. stocks, that likely means further turmoil is in store,
but that a calamity isnt at hand. In fact, some sectors
may be poised to benefit.
http://www.wsj.com/articles/china-aftershocks-couldstay-feds-hand-1440446394?mod=e2tw
Ambrose Evans-Pritchard in Telegraph: China's
market Leninism turns dangerous for the world
The world financial system is at a dangerous juncture.
Markets no longer believe that Chinas Communist
leaders are in full control of the countrys $27 trillion
debt bubble, or know how to manage fast-moving events
beyond their ken. This could be the early stage of a very
serious situation, said Larry Summers, the former US
Treasury Secretary. He compared it to the two spasms of
the Asian crisis in the summer of 1997 and again in
August 1998. Beijings botched efforts to prop up the
countrys stock markets have collapsed. An estimated
$300bn of state-orchestrated buying achieved nothing.
The Fed cannot cut rates this time, but it can issue a
clear signal that it plans to delay rate rises.
http://www.telegraph.co.uk/finance/economics/118208
17/Chinas-market-Leninism-turns-dangerous-for-theworld.html
WSJ: Peoples Bank of China Injects 150 Billion
Yuan Into Financial System
Chinas central bank injected more cash into the
financial system on Tuesday, stepping up its efforts to
counter intensifying capital outflows from a weakening
economy and tumbling stock market. In its routine
money market operation, the Peoples Bank of China
offered 150 billion yuan ($23.43 billion) worth of sevenday reverse repurchase agreements, a form of short-term
loans to commercial lenders.
http://www.wsj.com/articles/peoples-bank-of-chinainjects-150-billion-yuan-into-financial-system1440470471?mod=wsj_nview_latest
Greg Ip in WSJ: For All Its Heft, Chinas
Economy Is a Black Box
For sheer clout, Chinas economy outweighs every
country in the world save the U.S. But on transparency,
it remains distinctly an emerging market, with murky
politics, unreliable data and opaque decision making.
This veil dims the understanding of Chinas economy
and is an important reason its recent slowdown has
produced so much turmoil. Economists widely doubt
that China grew at a robust 7% pace in the second
quarter, as the countrys official statistics say. Citing
other data, such as power generation and passenger
travel, some think the rate might be as little as half that.
http://www.wsj.com/articles/for-all-its-heft-chinaseconomy-is-a-black-box-1440467253?
WSJ: Koreas Agree to End Latest Military Crisis
A deal between the two Koreas to end a military standoff
heads off near-term conflict but shows little has changed
in the Pyongyang playbook of provocations under young
North Korean dictator Kim Jong Un. In a news
conference in Seoul early Tuesday, South Koreas chief
negotiator announced an agreement to end North
Koreas threat to fire artillery at loudspeaker systems set
up by Seoul to blast anti-Pyongyang messages over the
border.
http://www.wsj.com/articles/north-south-korea-reachagreement-to-end-military-standoff-1440437881?
Times: Currencies pounded as rate freeze set to
last
As worries about economic growth in China sent stock
markets tumbling across the globe, in the 11th day of
sustained losses, it prompted economists to revisit their
forecasts for rate rises should the huge asset sell-off
continue over the coming days and weeks.
http://www.thetimes.co.uk/tto/business/economics/arti
cle4537197.ece

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Ranges (Up till 11.

Reading one global positioning index, the strategic

Who said what

News & Data

WSJ: Hedge Funds Ready to Ride Out Stock

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