ForexLive Asia-Pacific FX news wrap: Carnage in equities to open the week

• Crypto update – BTC hovering just over US$53K, ETH is just above US$2280
• South Korea exchange triggered its ‘sidecar’ on Kospi futures
• Japan chief cabinet secretary Hayashi closely watching market moves with sense of urgency
• Biden to convene National Security Council on Monday to discuss rising Mid East tensions
• China Caixin Services PMI for July 52.1 (prior 51.2)
• Bill Ackman says Fed was too slow to raise rates, now too slow to lower them
• PBOC sets USD/ CNY reference rate for today at 7.1345 (vs. estimate at 7.1912)
• US equity futures slammed further: NQ down 2.5%, ES down 1.6%
• Australian data – private inflation survey for July comes in at 0.4% m/m and 2.8% y/y
• New Zealand commodity prices -1.7% m/m (prior -1.5%)
• Sec State Blinken said on Sunday that Iran & Hezbollah attack on Israel could start Monday
• I’m not calling for an emergency Fed rate cut … but
• Japan Services PMI for July 2024: 53.7 (prior 49.4)
• Japan stocks – circuit breaker triggered for Topix
• Japan’s Nikkei 225 equity index is down more than 20% from its recent peak – bear market
• Bank of Japan June meeting minutes – view that import prices rising due to yen fall
• South Korean Finance Ministry says will intervene if needed
• Australian July Services PMI (final) 50.4 (prior 51.2)
• More on that Sahm rule US recession trigger – “100% iron clad indicator”
• AUD traders – Huge week coming up from the RBA: Policy meeting, Gov. Bullock speaks
• US equity index futures have opened sharply lower for the new week
• Sahm Rule founder says the US isn’t in recession right now, but risks are rising
• ICYMI – Goldman Sachs eyeing the August US employment report for a possible 50bp Fed cut
• US NHC says Debby expected to become a hurricane Sunday night, slam Florida on Monday
• NZD traders – Westpac forecasts the RBNZ to cut by 25bps in October and November 2024
• Saudi Aramco raised its selling price for Arab light for Asia, first bump higher in 3 mths
• Trade ideas thread – Monday, 5 August, insightful charts, technical analysis, ideas
• Monday morning open levels – indicative forex prices – 05 August 2024
• Weekly Market Outlook (05-09 August)
• A technical roadmap for the major currency pairs going into the new week PLUS S&P/Nasdaq
• Forexlive Americas FX news wrap 2 Aug: Bond market cuts rate for Fed after weak jobs data

Equity
markets were sold off heavily again. US equity index futures slid
further in Sunday
evening Globex trade, with
NQ sliding more than 2.5% and ES more than 1.6%.

South
Korean equities were hit hard as were Japanese. Circuit
breakers were employed in both countries to slow the fall.

Japanese
stocks plummeted. The
Nikkei and Topix indexes were down 5% within minutes of cash trade
opening and extended
lower from there. The Nikkei hit -21% from its peak in July, entering
bear market territory. We
had
an attempt at supportive
comments from Japanese chief cabinet secretary Hayashi.

The
story for USD/JPY
was
similar. It began falling well before the Tokyo open. There was the
odd bounce or two but, as I update, it has hits lows circa
144.78 and is not far above there.

These
extensions of last week’s moves of yen carry unwind and equity
liquidations didn’t need fresh catalysts. Having said that there
was an escalation in tensions in the Middle East. US Secretary
of State Blinken told his counterparts from the G7 countries on
Sunday that an attack by Iran and Hezbollah against Israel could
start as early as Monday. US
President Biden will convene a meeting with his national security
team to discuss developments in the Middle East on Monday afternoon,
US time.

Other
major FX traded
in much narrower ranges
(except against JPY of course).

The
Chinese yuan continued to strengthen. If there is a central bank in
the world doing cartwheels today it’s the People’s Bank of China.
The yen strength has leaked into yuan, taking pressure off the
currency and off the PBOC to prop it up. USD/CNH traded under 7.12
today, this is below the reference rate for USD/CNY for the session
and the highest for yuan in 7 months. Chinese equities firmed on the
day at one point. As I post mainland and HK indexes are slightly
lower, with much speculation that the ‘National Team’ (a group of
state-backed institutions and entities, including large state-owned
banks, investment funds, and state-owned enterprises, that act to
stabilize the Chinese stock market) were on the bid.

Gold
is
not a lot net changed on the session.

Crypto
sold off, caught up in the liquidations.

This article was written by Eamonn Sheridan at www.forexlive.com.