Ranges (Up till 12.

00pm HKT)
Currency

Currency

EURUSD

1.1503-615

EURJPY

136.74-137.55

USDJPY

118.45-119.51

EURGBP

0.7324-62

GBPUSD

1.5683-1.5721

USDSGD

1.3992-1.4083

USDCHF
AUDUSD

0.9385-0.9428
0.7097-0.7157

USDTHB
USDKRW

35.53-70
1185.5-1194.3

NZDUSD

0.6465-0.6511

USDTWD

32.47-89

USDCAD

1.3306-50

USDCNH

6.4864-6.5125

AUDNZD

1.0914-1.1014

XAU

1134.9-1146.1

Key Headlines
FX traders first paid attention to the S&P Futures, then
they turned to Shanghai.
There has been talks from US funds that China RRR
should have been 100bp. Like I wrote in my report
yesterday, a 50bp cut will be deemed to small those
China experts will condemn mainland. Anything bigger,
they will say the Chinese are now panicking.
Feels like some Asian central banks may have sold UST
and Usd to prop up their currency. Rumour that BNM
stepped in after 4.3030 high and Bank Indonesia was
said to have sold UsdIdr.
Former Malaysian PM Mahathir, When you borrow
the money, its not sovereign wealth, its sovereign debt

FX Flows
UsdJpy tracked the S&P Futures this morning started
positive, UsdJpy went up, futures went negative and
UsdJpy challenged bids surrounding 118.50. There is a
rumour of good bids scattered below up to lows 118.
Some people suspect this is from pension funds. Futures
pared loss and encouraged UsdJpy to 119-handle again.
Whole world turned to watch China, even the Japanese
equity market. Topside offers at 119.50 and also at
119.80. BOJ will be participating in ETF today for about
Jpy30bn.
People in Asia are bored with Euro. Chat with traders
that if China is calm, we could see unwinding of crosses
like EurAud, EurNzd, EurGbp and CadJpy. Offers in
EurUsd are seen above 1.1610; rumour of macro bids at
1.1450.
RBA Governor Glenn Stevens spoke at the National
Reform Summit and there was nothing spectacular. As I
mentioned above, market paid attention to the stock
market and there were slight evidence of EurAud
unwinding. Talk of exporters sitting on the bid at
0.7050-75.

The offers have lightened up in UsdCad and the price

action suggested liquidation of long CadJpy position.
After taking out 1.3350, the next big level is 1.3500,
which was what our traders are targeting. Bids are
mostly under 1.3250 now.
There has been talks from US funds that China RRR
should have been 100bp. Like I wrote in my report
yesterday, a 50bp cut will be deemed to small those
China experts will condemn mainland. Anything bigger,
they will say the Chinese are now panicking.

Asians
Feels like some Asian central banks may have sold UST
and Usd to prop up their currency. Rumour that BNM
stepped in after 4.3030 high and Bank Indonesia was
said to have sold UsdIdr.
Malaysian Ringgit weakened to 4.3030 to the Usd within
the first hour of trading onshore traders said spreads
quoted have widened while lacking central bank activity.
Story in Singapores Business Times about 2 Abu Dhabi
funds have decided not to participate in 1MDB debt
restructuring. Local banks appeared after the high
printed and suppressed the UsdMyr to 4.26s. An official
from 1MDB came out to deny report in Business Times.
UsdMyr backed off to 4.2300.
Keep an eye out for Bersih 4 rally in KL this weekend
Aug 29-30.
On 9-11, Singaporeans will go to polls at the general
elections. For what its worth, this is the first time
elections held on a weekday, a Friday! UsdSgd ended NY
at 1.4050, rose to 1.4083 when UsdMyr hit the high of
session. Into late morning, We then saw selling of Usd
from various other names trust banks and real money.
UsdSgd followed the Myr and traded to 1.3992.

Who said what

RBA Stevens: Key question for Australia is how to get
more growth
RBA Stevens: Maybe potential growth is bit lower than
thought
BOK Lee: Impact of Chinas action on South Korea
economy is complex
Japan: G7 financial and central bank authorities are
working closely on markets, global economy
NDRC: China macro policies showing effect

News & Data

South Korea Aug Consumer Confidence Index at 102
from 100
New Zealand July Trade Deficit widened to
Nzd649mio from Nzd60mio (est. Nzd600mio)

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.

 New Zealand July Imports at Nzd4.85bn from

Nzd4.29bn
New Zealand July Exports at Nzd4.2bn from
Nzd4.23bn
New Zealand July Trade Deficit 12 Month YTD at
Nzd2.69bn from Nzd2.848bn
Japan July PPI Services Y/Y up 0.6% from 0.4%
FT: Larry Summers and Ray Dalio flag return of
quantitative easing
Lawrence Summers, the former Treasury secretary, and
Ray Dalio, head of the worlds biggest hedge fund
manager, this week indicated that the US central bank
should consider restarting its quantitative easing
programme to counter deflationary dangers and
ameliorate tensions on financial markets. In an opinion
piece in the Financial Times, Mr Summers wrote that
raising rates in the near future would be a serious
error, but later went further and suggested on Twitter
that the Fed should even consider another bond buying
programme.
http://www.ft.com/intl/cms/s/0/8a5cb030-4b38-11e59b5d-89a026fda5c9.html#axzz3jmLbou9a
Jon Hilsenrath in WSJ: Central Bankers to
Confront Stock-Market Turmoil at Feds Annual
Retreat in Wyoming
Prior to these market events in the last few days, I
thought that this was about as close to a 50/50 call as
you can get, said former Fed Vice Chairman Alan
Blinder of the odds that the central bank would raise
U.S. rates in September. If markets dont stabilize, he
said, the Fed would likely hold off on a rate increase. If
the markets are in anything close to the sort of tizzy they
have been in the last few days, then the Fed will not
throw a match into the fire when it meets September 1617, said Mr. Blinder, a Princeton professor and friend of
Fed Chairwoman Janet Yellen.
http://www.wsj.com/articles/central-bankers-toconfront-stock-market-turmoil-at-feds-annual-retreatin-wyoming-1440536834?mod=wsj_nview_latest
FT: Malaysia PM Najib Razak has to go, says exleader Mahathir
Former Malaysian PM Mahathir Mohamad told current
leader Najib Razak - I dont believe it is a donation. I
dont believe anybody would give [that much], whether
an Arab, or anybody. I think at some stage he has to go
because today he has undermined the legal system,
http://www.ft.com/intl/cms/s/0/5743cb1c-4a24-11e59b5d-89a026fda5c9.html?ftcamp=published_links
%2Frss%2Fhome_us%2Ffeed%2F
%2Fproduct#axzz3jmLbou9a
Business Times: Abu Dhabi's IPIC mulls pulling
out of 1MDB's debt plan

AILING 1Malaysia Development Berhad (1MDB), a

state-backed firm at the heart of a huge political scandal
in Malaysia, is set for more financial pain amid signs that
Abu Dhabi's International Petroleum Investment
Company (IPIC) could pull the plug on a plan to help
restructure its US$3.5 billion debt, barely three months
after it agreed to do so. The Business Times understands
that IPIC and its subsidiary Aabar Investments, which
have had significant dealings with 1MDB, are having
second thoughts over the agreement that was hoped
would cut 1MDB's debts by RM16 billion (S$5.3 billion)
in exchange for undisclosed assets.
http://www.businesstimes.com.sg/companiesmarkets/abu-dhabis-ipic-mulls-pulling-out-of-1mdbsdebt-plan
Ambrose Evans-Pritchard in Telegraph: China
cuts rates to stem crisis, but doubts grow on
foreign reserve buffer
The PBOC has intervened heavily on the exchange
markets to defend the yuan, drawing down reserves at a
blistering pace. The unwanted side-effect is to tighten
monetary policy. It is a textbook case of why it can be so
difficult for a country to deploy foreign reserves
however large on paper - in a recessionary downturn.
Some reports suggest that the PBOC has already burned
through $200bn in reserves since then. If so, this would
require a much bigger cut in the RRR just to maintain a
neutral setting.
http://www.telegraph.co.uk/finance/economics/118231
76/China-cuts-rates-to-stem-crisis-but-doubts-grow-onforeign-reserve-buffer.html
WSJ: Traders Increase Bets Against Yuan
Wagers that Chinas yuan will weaken further against the
dollar have surged since the Peoples Bank of China
loosened its control over the currency. Investors are
betting the yuan will weaken 4% to 6.75 per dollar over
the next year, adding to a 4.4% drop since Aug. 11. The
bets in part reflect expectations for slowing growth in
China and concerns about capital outflows. Pressure also
is piling up on other currencies that could suffer knockon effects. In the Hong Kong dollar options market, the
cost of buying protection against a change in Hong
Kongs peg against the U.S. dollar, over the next month,
has surged to its highest in over a decade.
http://www.wsj.com/articles/traders-increase-betsagainst-yuan-1440546121?mod=wsj_nview_latest
WSJ: China's Big Down-Shift
China's leaders have warned their people they need to
accommodate a "new normal" of economic growth far
slower than the rate that propelled the economy into the
world's second-largest in the past two decades. Now, the
rest of the world also needs to get used to the new

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.

normal: a China in the midst of a tectonic shift in its

giant economy that is rattling markets world-wide.
FT: Questions over Li Keqiangs future amid
China market turmoil
China-led turmoil that has rocked global markets in the
past two weeks has also shaken the ruling Communist
party and left Li Keqiang, the prime minister, fighting for
his political future, according to analysts and people
familiar with the internal workings of the party. Mr Li
and Ma Kai, vice-premier, were the architects of a now
discredited plan to rescue Chinas stock markets in early
July, when the government rolled out a series of
unprecedented measures to prop up plunging stock
prices, according to people familiar with the matter.
http://www.ft.com/intl/cms/s/0/15c0be40-4b21-11e5b558-8a9722977189.html#axzz3jmLbou9a
SCMP: Chinas top brokerages under probe
Four of China's brokerages last night announced they
were being probed by the regulators for suspected failure
to review and verify clients identities, while state media
reported that Citic Securities was also under regulatory
cross hairs. The latest crackdown came amid renewed
efforts by Chinese authorities to stem a free fall in stocks,
which have lost 22 per cent in the past four days.
http://www.scmp.com/business/markets/article/18525
99/chinas-top-brokerages-under-probe
WSJ: Slow Dark Pools Cost Investors, Study Says
Dark pools creaky infrastructure and slow computer
systems are more of a threat to investors than the
ultrafast traders that lately have fueled anxieties about
the private trading venues, according to new research.
The technological shortcomings can cost mutual funds
and hedge funds millions of dollars over time, New York
research firm Tabb Group plans to say in a release
Wednesday.
http://www.wsj.com/articles/slow-dark-pools-costinvestors-study-says-1440540108?
mod=wsj_nview_latest
Kathimerini: Greek Snap polls edge closer
President Prokopis Pavlopoulos may not call a meeting
of party leaders on Thursday before appointing a
caretaker prime minister despite pressure from
opposition parties to do so as current Premier Alexis
Tsipras and his coalition partner Panos Kammenos have
indicated that they would not attend the talks.
http://www.ekathimerini.com/200899/article/ekathim
erini/news/snap-polls-edge-closer

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.