ForexLive Asia-Pacific FX news wrap: China sentiment slump: Country Garden worry, poor PMI

• China’s Country Garden has paid coupons of USD22.5mn – avoids default
• European Central Bank President Lagarde speaking again today, Schnabel, de Guindos also
• China’s Country Garden seeking to extend payments of another 7 onshore bonds by 3 years
• AUD, NZD, CNH all down: China PMI disappoints, worries re Country Garden potential default
• Chinese developer Country Garden has only hours to meet US$22.5mn payments
• Goldman Sachs have revised the probability of a US recession even lower, to 15% (from 20)
• Chinese Caixin Services PMI for August 51.8 (expected 53.6, prior 54.1)
• Think tank: UK should boost capital markets with pensions. (What could possibly go wrong?)
• Australian data, Q2 Current Account +7.7bn AUD (vs. expected +8.1bn AUD)
• PBOC sets USD/ CNY central rate at 7.1783 (vs. estimate at 7.2703)
• New Zealand data – ANZ Commodity Price Index for August -2.9% m/m (prior -2.6%)
• US First Lady Jill Biden tested positive for COVID-19, experiencing mild symptoms
• More on China setting up a new body to support the private sector
• Japan Jibun Bank August Services PMI 54.3 (prior 53.8)
• Brent oil – US Treasury official says price cap on Russian oil continues to work
• Australian final PMIs for August: Services 47.8 (prior 47.9) Composite 48.0 (prior 48.2)
• Australia data – ANZ Roy Morgan weekly consumer confidence 78.7 (prior 78.1)
• Japan data – July Household spending -2.7% m/m (expected +0.7%)
• Australian union plans full 2 week strike at Chevron’s LNG facilities if demands not met
• UK data for August showed BRC sales higher than July but Barclay consumer spending lower
• South Korean August CPI has risen at its fastest m/m rate since January 2017
• ANZ is targeting 150 on USD/JPY, but is wary of verbal yen intervention
• ICYMI – ECB’s Nagel says the Bank’s mandate is price stability, not to make banks happy
• Turn the machines back on! Globex is open.
• Bank of Canada preview – “Canadian growth shocker confirms … pause” – CAD forecast
• Heads up for more work stoppages at Australian LNG projects
• Preview: Reserve Bank of Australia widely expected to leave its cash rate unchanged today
• Goldman Sachs – more aggressive OPEC+ price target is a risk to its Brent oil $93 forecast
• Forexlive Americas FX news wrap: No drama on Labor Day
• Trade ideas thread – Tuesday, 5 September 2023

The
USD gained today, helped along by slumping risk in the wake of a poor
services PMI from China (see bullets above, China’s Caixin Services
PMI for August came in at 51.8 vs. a much expectation of 53.6 and
well down from July’s 54.1) and news that deeply indebted Chinese
property developer Country Garden had only hours left of the ‘grace
period’ to pay USD22.5mn due. As I write the wrap the news is
crossing that the firm has made the required 22.5mn USD payments,
thus avoiding default.

AUD,
NZD, yuan, CAD all fell heavily while EUR and GBP were down also.
USD/JPY rallied above 146.70.

From
Japan today were two data points of note (see bullets above):

• A
  Japan
  government official says that
  the Y/Y
  household spending data
  was
  the worst drop since February 2021
• Japan
  services PMI grew fastest in 3 months

Elsewhere,
South Korea’s inflation rate for August came in at
its fastest m/m rise since January 2017.

In
energy news, more aggressive industrial action at Chevron’s
Wheatstone and Gorgon LNG facilities has been flagged by the union.
The threat of a 2-week strike was made.

Still
to come from Australia is the Reserve Bank of Australia decision. An
unchanged cash rate is almost unanimously expected.

Asian
equity markets:

• Japan’s
  Nikkei 225 -0.2%

• China’s
  Shanghai Composite -0.7%

• Hong
  Kong’s Hang Seng -1.5%

• South
  Korea’s KOSPI -0.2%

• Australia’s
  S&P/ASX 200 -0.6%