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.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.