Risk appetites continue in Asian session today after S&P 500 and Nasdaq made record highs last week. At the time of writing, Nikkei is trading up 326 pts or 2% while other Asian indices are trading up too. China trade data are mixed but don't hurt risk sentiments. Trade surplus in China widened to USD 52.3b, or CNY 343b in July, above expectation of 47.6b and CNY 313b. However, exports dropped -4.4% yoy following a -4.8% yoy fall in June. Exports are continuing to drag on the performance of the economy. Imports also dropped -12.5% yoy, following -8.4% yoy fall in June.
In Japan, BoJ released a document of a summary of opinions at the monetary policy meeting on July 28/29. The central bank decided to double the purchase of ETFs at the meeting as part of its easing measures. The document noted that one member warned that "an increase in ETF purchases would make it clear that monetary easing is approaching its limit." However, another member said that "the Bank should reject the idea that monetary easing has its limit and side effects." And, the limit of JGB purchase should be the total of JGB outstanding. Another member noted that "it is necessary for the Bank to conduct a comprehensive assessment from the perspective of what should be done to achieve the price stability target of 2 percent at the earliest possible time."
Last week's strong US employment data boosted stocks S&P 500 and Nasdaq to new record high. Also, dollar recovered on revived expectation of Fed hike this year. But current fed fund futures are still pricing in less than 50% chance of a Fed hike by December. Also, Fed governor Jerome Powell noted that "with inflation below target, I think we can be patient." And he's more worried about "the probability of an era of weaker growth, lower potential growth, for a longer period of time " than before. Meanwhile, he noted that "the median estimate on the committee is 3 per cent for the long-term federal funds rate. It could be lower than that, in my view."
Looking ahead, RBNZ rate decision is a major focus of the week. The central bank is expect to cut the OCR by 25bps again to 2.00%. Meanwhile, attentions will also be towards the end of the week where a set of China data, US retail sales and Eurozone GDPs will also be released. Here are some highlights for the week:
- Monday: China trade balance; Swiss CPI; German industrial production, Eurozone Sentix investor confidence; Canada building permits
- Tuesday: China CPI; Australia NAB business confidence; Swiss unemployment; German trade balance; US trade balance, productions; Canada housing starts; US non-farm productivity, whole sales inventories
- Wednesday: Japan PPI, machine orders, tertiary industry index; Australian home loans;
- Thursday: RBNZ rate decision; UK RICS house price balance; Canada house price; US jobless claims, import prices
- Friday: New Zealand retail sales; China industrial production, retail sales, fixed asset investment; Eurozone GDPs; US retail sales, PPI; U of Michigan confidence