Navigating Currency Markets: Chinese Property Developer Reprieve, ARM’s IPO, Oil Production Figures, and USD Outlook
news | 12.09.2023 09:17
FX Daily: Muddling through
Risk assets are marginally better bid as troubled Chinese property developer, Country Garden, is reported to get a reprieve on bond payments and investors expect good demand for British chip designer ARM’s IPO in New York. Yet oil could push higher today on OPEC August production figures and we doubt the market wants to chase the dollar too much lower.
USD: Focusing on OPEC production figures and the NFIB survey today
The dollar softened a little yesterday as investors seemed to put money back to work in equities. Some of the recent underperforming currencies such as the Australian dollar and Mexican peso enjoyed decent rallies – both currencies we like on a medium-term basis. That mildly optimistic trend has continued overnight, where troubled Chinese property, Country Garden, is reported to have received creditor support for a three-year extension on some of its yuan-denominated bond payments. The idea of a China property crisis somehow spiralling into a full-scale banking crisis has ebbed over the last month, where China’s 5-year USD sovereign default swap has corrected back to 71bp from 87bp last month.
Looking ahead today, we should expect a quiet session ahead of tomorrow’s August US CPI release, where our US economist, James Knightley, warns of upside risks to the core number. Before that, however, we are focusing on two releases today. The first is the August NFIB small business optimism release, where we will look for any signs of easing in the US jobs market – especially on compensation. The second is the release of OPEC’s oil monthly report, where our