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On March 3, leaders of more than a dozen European and EU countries, as well as Ukraine and Canada, held a summit in London, UK, on the 2nd to discuss the Ukrainian crisis and European defense issues. British Prime Minister Starmer announced four steps to support Ukraine after the summit: continue to provide military assistance to Ukraine and exert economic pressure on Russia; to achieve lasting peace, Ukraines sovereignty and security must be ensured, and Ukraine must participate; after reaching a peace agreement, continue to strengthen Ukraines defense capabilities to prevent any possible future security threats; and establish an alliance dedicated to defending the Ukrainian peace agreement and guaranteeing peace. Starmer said that the participating countries agreed that Britain, France and other countries would work with Ukraine to develop a ceasefire plan, and would discuss and promote this plan with the United States.Ukrainian President Zelensky: We are ready to sign a mineral deal, and I believe the United States will be ready as well. I believe our relationship with the United States will continue.On March 3, according to the Ukrainian News Agency, German Chancellor Scholz said in London that Ukraines partners will continue to support the country, and Russias demands for Ukraine to demilitarize and support a pro-Russian leadership are unacceptable. Scholz stressed: "All parties at the meeting confirmed their willingness to support Ukraine." He reiterated that peace talks must follow a basic principle: no decision can be made without Ukraines participation. Scholz stressed that this means that Ukraines sovereignty and independence must be maintained, and only Ukraine itself can decide its own future, not others for it or on its behalf.On March 3, local time on March 2, leaders of many countries held a meeting in London on the Ukrainian crisis and European defense issues. After the meeting, British Prime Minister Starmer held a press conference and announced that Ukraine would be allowed to use 1.6 billion pounds of export financing to purchase 5,000 air defense missiles. Starmer also said that the United States is not an "unreliable ally."Ukrainian President Zelensky: European solidarity has reached an extremely high level, which has not been seen for a long time. We are committed to working together in Europe to lay a solid foundation for achieving peace in cooperation with the United States.

On weaker China PMI, stimulus focus, and US NFP data, USD/CNH rose above 6.9100

Daniel Rogers

Sep 01, 2022 15:24

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While the USD/CNH halted its three-day rally on Wednesday, it has since recovered some of its lost ground during Thursday's Asian trading as risk aversion and disappointing activity statistics push the pair higher. The pair's purchasers, however, are treading carefully as they await the introduction of the Chinese government's stimulus plan.

 

Caixin Manufacturing PMI in China fell to 49.5 from 50.2 predicted and 50.4 earlier, signaling the steepest decline in activity in three months. In doing so, the private manufacturing index confirms the gloomy state of the world's largest industrial sector, just as the official NBS PMI does.

 

According to Reuters's citing of state-run media, the Chinese cabinet has announced that the country will unveil the specifics of a set of recently announced policy changes at the start of September. According to the report, China's cabinet also plans to instruct commercial banks to make available medium- and long-term loans for infrastructure development and modernization.

 

Their power is bolstered by factors like China's covid-led lockdowns and rising tensions with Taiwan. The president of Taiwan, Tsai Ing-Wen, has recently expressed an interest in bolstering ties with the United States in the semiconductor industry.

 

The USD/CNH exchange rate also appears to be driven by central bankers' aggressiveness and strong US Treasury rates notwithstanding deteriorating data. Nonetheless, US 10-year Treasury rates have increased to a two-month high of around 3.21 percent, and 2-year bond coupons have increased to their highest levels since 2007 at around 3.51 percent. The S&P 500 Futures were trading at 3,930, down 0.36 percent intraday, their lowest level since late July as of publishing.

 

The US ADP Employment Change rose by 132K on Wednesday, below the 288K forecast and the 270K prior reading. However, year-over-year wage growth in August was 7.6 percent in the United States, which put Fed policymakers on edge. Following the release of the statistics, Cleveland Federal Reserve Bank President Loretta Mester told Reuters on Tuesday that she did not anticipate a rate cut from the Fed in 2019. Further, Lory Logan, the recently installed president of the Dallas Fed, has joined the ranks of hawkish central bankers by declaring, "Restoring price stability is our primary aim."

 

High inflation numbers and hawkish pronouncements from European Central Bank (ECB) and Bank of Japan (BOJ) policymakers highlight the central bankers' typically hawkish posture not only in the United States, but also in the Eurozone and Japan.

 

Positive news about the Chinese stimulus and the expected increase in the US ISM Manufacturing PMI for August from 52.0 to 52.8 on Friday should attract traders ahead of the release of the US Nonfarm Payrolls report on Friday (NFP).

 

At the time of writing, a USD/CNH decline seems unlikely until a support line near 6.8850 is broken. Even still, Monday's multi-month high of 6.9326 seems to have drawn buyers.


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