Both the CNY and the Chinese CSI 300 index continue to trend lower with the firm USD weighing on emerging markets as a whole while China feels the particular burn of trade war fears and weak sentiment regarding its capacity for economic growth.
"Things are not good [in China] and the complacency in Europe and the US is mind-blowing," stated Saxo Bank Head of Equity Strategy Peter Garnry in a note released this morning.
"China remains the biggest risk to global markets," Garnry adds.
In stocks, AAPL became the world's first trillion-dollar firm by market capitalisation Thursday while Toyota's latest earnings showed the firm exceeding expectations on profits while fretting Chinese demand and the impact of tariffs.
"We continue to be underweight automotive, EM, China, semiconductors while staying overweight healthcare, software/internet, and staples," says Peter Garnry.
In forex, Saxo Bank Head of FX Strategy John Hardy reports that the market is broadly ignoring Thursday's hawkish hike from the Bank of England while shifting to the apparent view that the Bank of Japan statement earlier this week in fact represented a net tightening.
"This move is more visible in non-USDJPY pairs on the dollar's strength," says Hardy.
Finally, Hardy says that EURUSD may finally be gaining some downside momentum with a move out of a recent triangle formation (see chart below).
For more on forex and equities, watch today's Morning Call in full.
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.