The Global Macro Pulse

Equities pared losses after a better-than-expected China flash PMI but markets remained nervous on signs of further tightening in China’s interbank liquidity. The Nikkei remained down 0.6%, Hang Seng down 0.8%, and Shanghai down 0.2%. In contrast, the Sensex rallied 0.5% and S&P futures rose 0.2%. The Antipodean currencies led rallies in G10. AUD rose 0.3% post China PMI to 0.965, while AUDNZD eased off a high of 1.150 overnight to 1.146. The JPY is largely unchanged at 97.3 and EUR at 1.379. USDAsia are generally lower on the day, led by MYR and IDR. USDIDR spot fell slightly to 11200 and USDMYR to 3.156. USDKRW broke below 1056 but continued to face BoK resistance.

China’s 7-day repo rate fixing rose 65bps to 4.67%, highest level since early August, but still well below the 10% peak in June. The PBoC didn’t inject liquidity today.