Tuesday, June 27, 2023

Capital Markets: "PBOC Sends Signal in Lower Dollar Fix, while the Canadian Dollar makes a 9-Month High"

 From Marc to Market:

Overview: Hawkish comments by ECB President Lagarde at the central bank symposium in Sintra and the PBOC's weaker dollar fix has weighed on the greenback today. It is lower against most of the G10 currencies, but the Japanese yen and Norwegian krone. It also slipped to a new nine-month low against the Canadian dollar. Emerging market currencies are also mostly firmer, with the notable exceptions of the Russian rouble and beleaguered Turkish lira. There is still little clarification of the recent events in Russia.

Asia Pacific equities were mixed. Japan, Taiwan, and South Korean markets eased, but China, Hong Kong, and most of the other large markets in the regions advanced. Europe's Stoxx 600 and Germany's Dax are extending their retreat for the seventh consecutive session, while US equity futures are posting modest gains. Benchmark 10-year yields are a little more than a basis point higher in Europe and the US, which puts the US Treasury yield around 3.74%. Gold is trading quietly in the $1920-$1930 range. August WTI is has traded on both sides of yesterday's range and is near $68.40 after being turned back from an attempt above $70 earlier in the session. A close below yesterday's $68.70 low would be a negative technical development and would suggest the risk of a move back to this month's lows around $67.

Asia Pacific
Despite numerous initiatives to support real estate market in China, stresses are still percolating. Two more developers failed to meet their dollar obligations over the weekend. Many investors appear to be chomping at the bit for more economic support. Central China Real Estate, the 33rd largest builder (by contract sales) was unable to make a dollar-interest-rate payment before the weekend. It announced it would suspend payments on all offshore debt. Leading Holdings Group is not in the top 100 Chinese builders. It was unable to pay in full a $119.4 mln owed at the end of last week. Several other Chinese builders met interest rate payments at the end of the 30-day grace period, or shortly after, according to reports last week....