Market News

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader…

The scale of the beat on industrial output, a small monthly gain against a Reuters poll pointing to a 0.7 percent contraction, removes some of the immediate downside risk to Japan's growth outlook that markets had been pricing in going into the release. The sharp rebound in retail sales, both on the month and year-on-year, suggests consumer spending held up better than the June slump had implied, which is relevant for the Bank of Japan's ongoing debate about the durability of domestic demand as a driver of inflation. The manufacturers' survey pointing to a strong 6.4 percent output gain in August followed by a sizeable September pullback suggests some of the strength may reflect front-loading or payback dynamics rather than a clean…

With a 25 basis point hike already close to fully priced by financial markets, ASB's preview suggests limited scope for a hawkish surprise on the decision itself, meaning any market reaction is more likely to come from the tone of the accompanying statement and the shape of the published OCR track. ASB expects that track to signal at least one further hike by year end and a peak around 3.3 percent, somewhat below current market pricing, which if delivered as expected could see a modest dovish repricing in the front end of the New Zealand curve and some pressure on the kiwi dollar. The bank also flags tightening financial conditions, including a firmer trade-weighted index and higher swap rates, as a theme the RBNZ is likely to cite, which…

Bessent framing China's trade surplus as unacceptable at a G20 gathering he is personally trying to reshape signals Washington intends to use the forum to build multilateral pressure on Beijing rather than relying solely on bilateral tariffs, which could unsettle currencies and equities across export-heavy Asian economies if other G20 members show any appetite for coordinated trade barriers. At the same time, his confirmation that tariff reductions on $30 billion of non-strategic goods on each side will continue suggests the two countries are not walking back the narrower de-escalation reached earlier this year, which should limit downside for markets pricing in a stable run into the Trump-Xi summit expected around September 24. The…

Bessent's decision to describe the yen's recent slide as well contained is a meaningful signal in itself, since it lowers the near-term odds of a repeat of the rare joint US-Japan intervention carried out last month when the currency hit 40-year lows. By declining to push the BOJ toward consecutive rate hikes and instead deferring to Ueda's judgment, Bessent leaves the pace of Japanese tightening squarely in Tokyo's hands, which markets may read as reducing the chance of an aggressive near-term move. His comment that Japan has likely reached the end of Abenomics, together with his praise for reduced government intervention in economic policy under the current administration, signals continued US comfort with Tokyo's gradual policy…

The NZIER Shadow Board result points to a hike as the more likely outcome on Wednesday, but the split within the panel, with several members preferring to hold at 2.50 percent, tempers how confidently markets should price it in. A 25 basis point increase to 2.75 percent would extend the tightening cycle the RBNZ resumed in July and align with the median view already circulating among bank economists ahead of the meeting. Given that most forecasters already expect this outcome, the more market-sensitive elements are likely to be the accompanying OCR track and any signal on October, where the panel and outside economists broadly expect a data-dependent, rather than pre-committed, stance. A hike delivered with cautious forward guidance would…

Oil is higher, up around 2%. 

US equity index futures have opened little changed. 

Earlier:

• U.S. forces have struck two Iranian launchers near Strait of Hormuz
• Oil - Escalation news: Iran fires missiles from four provinces after Larak Island strike

This article was written by Eamonn Sheridan at investinglive.com.

A retaliatory barrage spread across four Iranian provinces, rather than a single strike point, signals Tehran is deliberately widening the front rather than responding narrowly to the Larak Island strike, which is likely to be read by traders as an escalation rather than a contained tit-for-tat. The anti-ship cruise missile launches toward the Strait of Hormuz are the most directly relevant to oil markets, since they target the shipping lane itself rather than a fixed installation, reviving the mine and projectile risk that had only just been described as cleared by US Central Command. Brent and WTI are likely to firm on the news, reversing some of the recent pullback tied to Oman-mediated talks over a temporary shipping corridor. Freight…

Kevin Warsh's Jackson Hole remarks pushed the implied probability of a September rate rise to around 58 percent from 35 percent a day earlier, a sharp repricing for such a short window. Short-term Treasury yields rose more than longer-dated ones, reflecting the direct link between near-term Fed expectations and the front end of the curve. Equities tied most closely to the domestic economy underperformed, with small caps and industrials leading declines, a pattern consistent with markets pricing in tighter policy at a moment when consumer spending has shown signs of softening. The move also complicates the recent stabilisation in longer-term yields that followed the Treasury's buyback announcement, since a more hawkish Fed reduces one of…

It's a packed data agenda ahead with the priority item Chinese PMI data. 

Setting the stage for the session ahead is this renewed hostility:

• U.S. forces have struck two Iranian launchers near Strait of Hormuz

China's National Bureau of Statistics releases its official August Purchasing Managers' Indices on Monday at 9:30am Beijing time (01:30 GMT/2130 US Eastern time Sunday), with the manufacturing print due to show whether a contraction that deepened sharply in July has begun to ease.

A Reuters poll of 17 economists puts the consensus for the official manufacturing PMI at 49.6, up from July's 49.2 but still below the 50-point line separating expansion from contraction. July's reading had missed expectations of 49.9 and marked a 1.1 point…

Monday has started already ... 

• U.S. forces have struck two Iranian launchers near Strait of Hormuz

Early FX indications:

• EUR/USD 1.1582
• USD/JPY 160.11
• GBP/USD 1.3534
• USD/CHF 0.8080
• USD/CAD 1.3909
• AUD/USD 0.7160
• NZD/USD 0.5916

This article was written by Eamonn Sheridan at investinglive.com.

Axios with the report that U.S. forces have struck two Iranian launchers on Larak Island.

Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into Strait of Hormuz.

Axios cited a US official statement. 

Earlier over the weekend, UKMTO reported an incident 12NM north of Khasab, Oman, that s tanker had been struck by an unknown projectile whilst transiting inbound in the Strait of Hormuz.

Any resumption of direct US strikes on Iranian territory near the Strait of Hormuz revives the risk premium that has underpinned oil markets since the conflict began in February. Brent had been easing toward the mid-eighties on hopes that Oman-brokered talks might open a temporary shipping corridor, so a strike…