Ranges (Up till 11.

40am HKT)
Currency

Currency

EURUSD

1.0965-935

EURJPY

135.88-136.305

USDJPY

123.845-124.05

EURGBP

0.7071-82

GBPUSD

1.5501-23

USDSGD

1.3680-1.3722

USDCHF
AUDUSD

0.9587-0.9610
0.7269-0.7362

USDTHB
USDKRW

34.81-90
1159.4-1168.5

NZDUSD

0.6564-0.6624

USDTWD

31.21-452

USDCAD

1.3018-50

USDCNH

6.2137-6.2218

AUDNZD

1.1066-1.1149

XAU

1077.4-1091.0

Key Headlines
Gold is not precious as it fell to 1077.4.
S&P said they could lower the ratings if Australia's
budgetary performance does not improve broadly as we
currently expect. Continued parliamentary gridlock on
the budget could trigger this scenario, as could an
external shock. The latter could come from further
deterioration in Australia's terms of trade, for example,
or from a sharp increase in the banking sector's cost of
external funding. Aud fell to 0.7269.
China State Council said the PBOC and SAFE will
improve the market-oriented formation mechanism of
the yuan exchange rate and expand the exchange rate's
two-sided fluctuation range.

FX Flows
Friday is here!
Gold continues to weaken this morning, to be honest,
bids are scarce. In the past, whenever this precious metal
falls, we would encounter Mainland buyers but this time,
not a soul. Low 1082.6 and spot jumped back to 1085. It
felt like someone triggered stops or ran into a serious
buyer. When Chinese announced the opinion on Yuan
trading band, spot Gold fell again and this time, took out
the 1080. Low seen 1077.4. Spot Silver got to 14.48.
I was expecting a slow and calm session but dead wrong.
China Caixin Manufacturing PMI slipped to 48.2 from
49.4 and forecast was an increase to 49.7. Then State
Council said to expand the Yuan trading band. Ending
the morning with S&P said they could lower the ratings if
Australia's budgetary performance does not improve.
Australian dollar, which was trading above 0.7345, fell to
0.7319 in split second on the China PMI; then to 0.7295.
The comment by Standard & Poor that it could lower
Australia rating if budget does not improve. AudUsd fell
to low 0.7269. Where next? Our trader, Sam is trimming
shorts here 0.7275-80, he still like to sell this on rally to
0.7300-20.

Nikkei was first to report that Meiji Yasuda Life is paying

about $5bn to buy US-based Stancorp Financial. This got
some people excited and UsdJpy popped when the
Japanese lifer said it will pay with cash in hand.
However, UsdJpy didnt do much. Japanese have offers
124.20-50 and usual bids at 123.50-60. Stops are
developing near 123.25 from system accounts and some
talk of more at 122.70-75. The move in Aud triggered
sales in AudJpy. This pressured UsdJpy to 123-eighties.
Euro traded lower, in line with Aud and Nzd. There are
talks of sovereign bids mid-1.09 while offers are placed
1.1020. Getting told of stops building up above 1.1040.
But do keep an eye on this Gbp. Eur, Aud, Nzd has come
off a lot yet this Cable is stubbornly bid at 1.5501. I heard
there are stops just under 1.5500.
An interesting topic here IMF chief Lagarde said
participation in the third bailout would require debt
relief. Some Eurogroup governments (especially
Germany) have rejected relief/haircut.
Platform names have been selling UsdCad this morning.
They started from 1.3040; we got down to 1.3018 then
bounced to 1.3040 following the China PMI. Seeing real
money offers above 1.3045 and buy orders under 1.3000.

Asians
It is all about China weak PMI, band widening and
Usd/Asia popped.
USDCNH, which has been trading mid-6.21s jumped to
6.2185. Market was first sceptical about the news
because this widening is actually an opinion from State
Council. Prop accounts jumped in and subsequently
pushed the Usd above 6.2210.
Agent banks were aggressive this morning, capping
UsdMyr at 3.8080. 1-month NDF came under pressure
initially trading down to 3.8250 but NDF points
widening, allowed the 1-month NDF to trade back above
3.8300.

Who said what

Brazil Finance Minister Levy: Brazil will be tightening
from now to end of the year
Brazil Finance Minister Levy: Adjusting target doesnt
mean less fiscal effort
Brazil Finance Minister Levy: We are changing federal
debt dynamics
Brazil Finance Minister Levy: Showing that revenue
drop more than just GDP slowing
Brazil Finance Minister Levy: We need to rebalance
economy

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

 Brazil Finance Minister Levy: Brazil will continue to

rebalance economy in H2
Brazil Finance Minister Levy: We are now working
with realistic prices in energy
Japans Meiji Yasuda said to acquire Stancorp for
Jpy600bn with cash on hand
China State Council: Issues opinion on Yuan trading
band
China State Council: To improve Yuan rate mechanism
and expand Yuan trading band
China State Council: To keep Yuan exchange rate
basically stable
S&P: Australia rating could be lowered if budget
doesnt improve

News & Data

South Korea July Consumer Confidence at 100 from 99
New Zealand June Trade Balance fell Nzd60mio from
+Nzd350mio (est. +Nzd100mio; revision +Nzd371mio)
New Zealand June Exports at Nzd4.23bn from
Nzd4.36bn
New Zealand June Imports at Nzd4.29bn from
Nzd4.01bn
New Zealand June Trade Balance 12-Month YTD
Nzd2.848bn from Nzd2.57bn
Japan July Preliminary Nikkei Manufacturing PMI
51.4 from 50.1
China July Preliminary Caixin Manufacturing PMI
48.2 from 49.4 (est. 49.7)
Reuters: Japan's Meiji Yasuda to buy U.S.
insurer StanCorp for $5 billion
Japan's Meiji Yasuda Life Insurance Co [MEIJY.UL] said
on Friday it has agreed to buy U.S.-based StanCorp
Financial Group Inc (SFG.N) for $5 billion, the latest
multi-billion deal by acquisitive Japanese insurers. Meiji
Yasuda, Japan's third-largest life insurer by premium
revenue, has said previously it was looking for targets in
the world's largest life insurance market to act as an
engine for future growth.
http://www.reuters.com/article/2015/07/24/usstancorp-finl-gr-meiji-yasudaidUSKCN0PX2TD20150724
MarketWatch: The true cost of Chinas
multibillion-dollar market intervention
As the Shanghai Composite Index dove and panic sales
spread, the Chinese government spent billions of dollars
to soothe battered sentiment and shore up the stock
market. But China may eventually end up paying a much
higher price from delayed reforms and a distorted stock
market, analysts say. Altogether, Chinese authorities are
estimated to have mobilized as much as 5 trillion yuan,
almost 10% of the gross domestic product, to halt panic
sales, Reuters reported. But such drastic tactics, while
effective in the short term, could discourage foreign

investors participation in the stock market and

challenge Chinas aspirations of becoming a global
financial power.
http://www.marketwatch.com/story/the-true-cost-ofchinas-multibillion-dollar-market-intervention-2015-0723
FT: Grillo calls for Italy to throw off euro
straitjacket
Beppe Grillo, the leader of Italys populist Five Star
Movement, has launched a full-throated attack on the
euro, saying Rome should abandon what he called an
anti-democratic straitjacket. Mr Grillo, whose party is
the second most popular in Italy, demanded the
government formulate a plan B to exit the single
currency and take back our monetary sovereignty.
http://www.ft.com/intl/cms/s/0/bce25bca-3136-11e591ac-a5e17d9b4cff.html#axzz3gT82RBgi
Peter Spiegel in FT: Greece and creditors return
to the bargaining table. Now what?
With the Greek parliament passing the final round of
austerity measures to launch talks on a new 86bn
bailout, representatives of the countrys bailout monitors
will return to Athens on Friday for the first time in
months to begin the final slog towards agreeing a deal.
http://www.ft.com/intl/cms/s/0/132a6574-3144-11e58873-775ba7c2ea3d.html#axzz3gT82RBgi
Anwar Ibrahim in WSJ: Malaysias Growing
Opposition Cant Be Silenced
Since Prime Minister Najib Razaks 2013 electoral
victory, which was plagued by widespread allegations of
gerrymandering, fraud and voter intimidation, Malaysia
has taken a turn for the worse. Mr. Najib, who once
promised democratic and economic reforms and pledged
to allow the voices of dissent to be heard, has doubled
down on political repression. A former deputy prime
minister of Malaysia and leader of the opposition, I am
now in the fifth month of a five-year prison sentence that
has been roundly condemned by governments and
human-rights groups around the world. I spend my days
in solitary confinement in meditation and in the
company of the few books that are allowed into my cell.
Meanwhile, allegations of corruption at the highest levels
of Malaysian government have surfaced.
http://www.wsj.com/articles/malaysias-growingopposition-cant-be-silenced-1437692741?
mod=wsj_nview_latest
Kathimerini: As creditors return to Athens,
Tsipras grapples with domestic challenges
Representatives of Greeces lenders are due to begin
arriving in Athens on Friday ahead of talks on a third
bailout but internal party politics continues to dominate
Prime Minister Alexis Tsiprass agenda. A few hours

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

after Parliament passed the second bill containing prior

actions demanded by lenders as a pre-condition for
holding bailout talks, Tsipras met with parliamentary
speaker Zoe Constantopoulou, who opposed the
legislation as she did a week earlier.
http://www.ekathimerini.com/199884/article/ekathime
rini/news/as-creditors-return-to-athens-tsiprasgrapples-with-domestic-challenges
WSJ: German Finance Chief Schubles Tough
Tone Heightens Uncertainty Over Bailout
Over the past two weeks, the 72-year-old Wolfgang
Schuble has puzzled even German officials who know
the finance chief well with remarks questioning the
wisdom of a new bailout for Greece. He has also hinted
he might resign over differences with Chancellor Angela
Merkel. The comments mark a shift to a more hawkish
tone for Germanys longest-serving national politician,
whose career has been defined by loyalty to his political
allies and to the idea of European integration. They also
underscore the fragility of last weeks agreement among
eurozone leaders to work toward a new bailout deal for
Greece, which governments will need to sign off on as
early as next month.
http://www.wsj.com/articles/german-finance-chiefschaubles-tough-tone-heightens-uncertainty-overbailout-1437684438?mod=wsj_nview_latest
Jeremy Warner in Telegraph: Interest rates
could run away from Mark Carney
Get ready for a shock. Interest rates may well peak at a
much higher level than the Bank of England and other
central bankers suggest. In the last two weeks, both
Janet Yellen, Chair of the US Federal Reserve, and Mark
Carney, Governor of the Bank of England, have prepared
the ground for a rise in interest rates, possibly by the end
of this year. The age of rock-bottom rates may finally be
drawing to a close. Its been a long time coming.
http://www.telegraph.co.uk/finance/11759027/Interestrates-could-run-away-from-Mark-Carney.html

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.