Ranges (Up till 11.

59am HKT)
Currency

price is down, WSJ story about Canadas high-cost oilsands producers are struggling.

Currency

EURUSD

1.1115-49

EURJPY

137.72-138.115

USDJPY

123.78-99

EURGBP

0.70755-0.7103

GBPUSD

1.5675-1.5702

USDSGD

1.3987-1.4035

USDCHF
AUDUSD

0.9640-62
0.7342-73

USDTHB
USDKRW

35.51-57
1179.5-1188.7

NZDUSD

0.6593-0.6616

USDTWD

32.421-68

USDCAD

1.3101-30

USDCNH

6.4420-6.4635

AUDNZD

1.1106-53

XAU

1133-1139.5

Key Headlines
Are we there yet? Almost but not yet.
Usd was sold at the Tokyo open, same time it coincided
with denial by Bank Negara that it issued a circular to
forex dealers to disallow onshore banks in Malaysia from
taking onshore fixing orders from offshore banks. Usd
was sold off initially but Usd/Asia came back bid into
late morning.
It felt like it was a one-time opportunity for real money
accounts to get out of short Usd positions.
One thing for sure, Gold price is looking rather firm
this morning. We started at 1133.9 and now 1138.0. I
heard buyers are more systematic and offers are scarce.

FX Flows
Usd was sold at the Tokyo open, same time it coincided
with denial by Bank Negara that it issued a circular to
forex dealers to disallow onshore banks in Malaysia from
taking onshore fixing orders from offshore banks.
EurUsd popped to 1.1149, onshore UsdMyr fell but larger
impact felt on the 1-month NDF.
EurUsd took off from 1.1122 to 1.1149. Some said stops
were taken out near 1.1140 and I suspect EurGbp stops
near 0.7100 were also triggered. I hear more stops in
EurGbp lurking above 0.7120 and in Euro, fresh offers
atop 1.1190 and stops above 1.1215.
Move in UsdJpy this morning was disappointing. Was up
at 123.93 and dipped to 123.82. We got the feeling
Japanese arent too keen to participate in Usd sales amid
BOJ buying ETF and today being Goto-bi Day. I heard
bids are lined up to 123.50 and offers atop 124.25.
The Aussie dollar is stuck. As mentioned 2-days ago, bids
are lined up below 0.7330 to 0.7300 from exporters and
upside offers from 0.7390.
During the selloff early part of Asia, UsdCad shifted from
NY close of 1.3126 to low of 1.3001. Selling was just
speculative and nothing to substantiate the move. Oil

One thing for sure, Gold price is looking rather firm this
morning. We started at 1133.9 and now 1138.0. I heard
buyers are more systematic and offers are scarce.

Asians
Bank Negara issued a statement this morning denying a
report that the central bank issued a circular to forex
dealers to disallow onshore banks in Malaysia from
taking onshore fixing orders from offshore banks. The
actual report was published by a local Malaysian
newspaper The Sun Daily. The newspaper said the
circular was sent out on Tuesday, to FX dealers from
local and foreign financial institutions that onshore
banks will be strictly not allowed to take onshore fixing
orders from offshore banks. Said pre-approval must be
obtained from BNM directly for fixing orders from
onshore-offshore corporate clients on a case-by-case
basis.
The BNM statement sent onshore spot lower from
opening 4.1020-70. Offshore 1-month NDF was sold
from 4.11-handle to 4.08-handle. Sell off was short lived
as Usd bounced back. It felt like it was a one-time
opportunity for real money accounts to get out.
Usd/Asia weakened on that but bounced back after.
As a proxy, traders sold UsdSgd too and sent Usd from
1.4015 to 1.3987. UsdSgd found tech accounts buying on
this dip.
Back to CNY fixing and it was in line with what we called
for at 6.3915. The overnight move was linked to IMF
report some people were disappointed but I think this
is overplayed. The IMF researchers did recommend that
the inclusion to be delayed to Sept 2016. No one expects
Yuan to be in SDR this year anyway.
The USDCNY central parity fix sent USDCNH down to
6.4423 from NY close of 6.4625. Patrick Bennett said he
continues to look for Chinese Yuan to underperform on
NEER (trade-weighted basis) thus any further Usd
downside versus majors or regional pairs should not be
matched in magnitude by USDCNY.
PBOC has injected total of Yuan150bn in liquidity this
week. Last time the central bank injected large amount
was over the Chinese New Year holidays Feb 2015.
Interesting conversation with one of the asset manager
and he sees continued weakness in CNY and CNH. His
belief is that CNY has been overvalued in the past
USDCNY fixing has way too low and thinks new

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.

mechanism offers fair value. However, Yuan weakness

will be under control.

Who said what

PBOC Zhou: Policy banks need to replenish
PBOC injects net Yuan150bn this week
South Korea Choi: Overall risk from China instability
burdensome for Korea
South Korea Choi: Instability may worsen Korean
export competitiveness
Fed Kocherlakota: Higher inflation target could
mitigate risks
Fed Kocherlakota: Low real interest rates pose
instability risks
Taiwan cabinet: Approves 2016 government budget
plan
Taiwan: To ease rules on tax rebate for tourists
Taiwan: To ease rules on insurers domestic
investments

News & Data

New Zealand July ANZ Job Ads rises 0.1% from -0.6%
New Zealand Aug ANZ Consumer Confidence Index at
109.8 from 113.9
New Zealand Aug ANZ Consumer Confidence M/M fell
3.6% from -5%
China MNI Aug Business Indicator at 57.1 vs 48.8 in
July
WSJ: Canadian Oil-Sands Producers Struggle
Canadas high-cost oil-sands producers are struggling as
oil prices sink to fresh six-year lows, and even the most
efficient drillers are losing money on every barrel they
produce at current prices, according to a report
published Wednesday. Canadian oil-sands production
has grown 30% in the past five years but the recent price
slump has hit producers bottom lines and forced them
to suspend development of new projects.
http://www.wsj.com/articles/oil-sands-producersstruggle-1440017716?mod=wsj_nview_latest
Reuters: Fed's Kocherlakota floats increase in
U.S. inflation target
A top U.S. central banker on Thursday floated the
possibility of increasing the Federal Reserve's inflation
target as a way to reduce financial stability risks and
make it easier for the Fed to achieve price stability and
full employment. Minneapolis Fed President Narayana
Kocherlakota, speaking at the Bank of Korea in Seoul,
stopped short of advocating the move, saying that the
Fed would need to weigh the benefits against costs
including a possible hit to Fed credibility if it is seen as
simply moving its own goal posts.
http://www.reuters.com/article/2015/08/20/us-usafed-kocherlakota-idUSKCN0QP01A20150820?
feedType=RSS&feedName=businessNews

Ambrose Evans-Pritchard in Telegraph: China's

August scare is a false alarm as fiscal crunch
fades
At the risk of sticking my neck out, I think that Gothic
warnings of a Chinese collapse this year will look silly by
Christmas. The reckoning has been delayed again. The
"devaluation" saga this month is a red herring. The
PBOC has switched from a dollar peg to a 'managed float'
to protect itself from any further surge in the US dollar
as the Fed tightens policy.
http://www.telegraph.co.uk/finance/comment/ambrose
evans_pritchard/11810420/Chinas-August-scare-is-afalse-alarm-as-fiscal-crunch-fades.html
Nikkei: Japan Post companies to seek 1.5tn yen
in first-round offerings
Three Japan Post companies plan to raise a total of
around 1.5 trillion yen through first-round offerings
when they go public in November, managing
underwriters told securities companies also looking to
sell the shares. Japan Post Holdings and units Japan
Post Bank and Japan Post Insurance are expected to list
on or around Nov. 4. The Japan Exchange Group is
bringing its audit of the entities to a close, and is
expected to approve the listings as early as Sept. 10. The
government plans to sell the majority of its holdings in
the companies in three rounds of offerings.
http://asia.nikkei.com/Markets/Tokyo-Market/JapanPost-companies-to-seek-1.5tn-yen-in-first-roundofferings
Globe & Mail: The reality of Harpers
Conservatives and Canadas stagnant job growth
Harper Conservatives love to portray themselves as the
one federal party committed, above all other economic
objectives, to creating jobs for Canadians. Indeed, in the
current marathon campaign, we can expect to hear the
Tories boast often about their job-creating record. Over
the past two years and change, the country has added a
net 263,000 jobs or a thin 10,000 a month. (U.S.
employment, after accounting for the size difference,
grew at nearly triple the Canadian pace over the same
period.) And its not just the quantity of job creation that
has been lacking, but the quality.
http://www.theglobeandmail.com/report-onbusiness/economy/economic-insight/the-reality-ofharpers-conservatives-and-canadas-stagnant-jobgrowth/article26025487/
FT: Norway feels the Arctic chill
A persistently low oil price is starting to bite, pushing up
unemployment by more than expected and hitting house
prices in Stavanger, Norways answer to Houston. After
20 years of oil-fuelled growth that not even the global
financial crisis could interrupt there are concerns locally

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.

about what happens next, especially if the lay-offs in the

petroleum sector increase. At the same time, a chill has
been cast over the prospects for Arctic oil.
http://www.ft.com/intl/cms/s/0/bfade0cc-466c-11e5b3b2-1672f710807b.html#axzz3j0R1lk6c
China Business News: PBOC Governor Says
Policy Banks Need to Replenish Capital
In an interview PBOC Governor Zhou Xiaochuan said 3
policy banks can increase capital adequacy ratio via
injections from investors that represent national
interests, including fiscal and pension funds. He said
there is no need to strictly limit policy banks from
absorbing deposits and policy banks will continue to
mainly rely on selling bonds to raise financing as they
barely have opportunities to acquire commercial banks.
http://finance.sina.com.cn/china/20150820/00382301
0921.shtml

advocating that the snap elections should not be called

before early October. Kathimerini understands that one
set of advisers is urging the prime minister to move
swiftly and call a ballot for September 20 or 27 at the
latest so the government can overcome the internal rift
that has opened up within SYRIZA.
http://www.ekathimerini.com/200730/article/ekathime
rini/news/snap-polls-look-certain-tsipras-set-to-decidedate

Sun Daily: Bank Negara steps in to stem ringgit

freefall
Bank Negara Malaysia (BNM) has issued a circular to
foreign exchange dealers of both local and foreign
institutions disallowing onshore banks from taking
onshore fixing orders from offshore banks, sources say.
The move follows the ringgits plunge to 4.10 to the
dollar last Friday and the foreign exchange reserves
dropping to below the US$100 billion threshold in July.
http://www.thesundaily.my/news/1525455
David Pilling in FT: Najib Razak has too much
power for Malaysias good
The story is that in March 2013 one or more unnamed
Middle Eastern donors transferred a total of nearly
$700m into the personal account of Najib Razak, prime
minister of Malaysia. The generous amount was a
donation to be lavished on that years election campaign
of the ruling United Malays National Organisation as Mr
Najib saw fit. So sordid are the goings-on in Malaysia
these days that, astonishingly, this is not the case being
mounted against the prime minister. This is the case for
Mr Najibs defence. Malaysias widely lampooned prime
minister is in such a deep, dark and money-stuffed hole
that this is the version of events being promoted by his
allies.
http://www.ft.com/intl/cms/s/0/e89c88c2-45c6-11e5b3b2-1672f710807b.html#axzz3j0R1lk6c
Kathimerini: Snap polls look certain, Tsipras set
to decide date
Prime Minister Alexis Tsipras appears to have decided
that Greece should hold early elections but has not yet
taken a decision on when they should be, sources said on
Wednesday. Tsipras is listening to advice from
government colleagues who are recommending that the
polls should be held within September as well as those
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.