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On September 6, the board of directors of China Reinsurance approved and disclosed a plan to issue domestic shares to specific targets. The issuance, to be subscribed by the Ministry of Finance in cash, aims to raise a total of RMB 3 billion. After deducting relevant issuance expenses, all proceeds will be used to increase China Reinsurances core tier 1 capital. The final fundraising amount and issuance plan are subject to final approval from relevant regulatory authorities. The issuance price is RMB 1.33 per share, representing a premium over China Reinsurances recent H-share secondary market price. Approximately 2.256 billion shares are planned to be issued, and the subscribers have committed to holding these shares for the long term.Ukrainian President Volodymyr Zelenskyy said on Sunday, ahead of a meeting with the U.S. peace envoy in Kyiv, that Ukraine wants an end to the war and needs security guarantees.September 6th - According to the emergency rescue command center for the "8.26" mudslide disaster in Gyirong County, Tibet Autonomous Region, as of 6 p.m. on September 5th, the disaster has resulted in 43 deaths and 519 missing persons.September 6th - Iranian Parliament Speaker Mohammad Ghalibaf stated in an open parliamentary session today (September 6th) that the recent attacks by Iranian armed forces on US bases "are just the beginning," and that the US should recognize that "the rules of the game have changed." Any future actions against Iranian interests and security will be met with a "faster, fiercer, and more painful" response.On September 6th, special commentator Su Xiaohui stated that Russia and Ukraines agreement to halt attacks on each others capitals for three days, ostensibly to technically ensure the safety of the US delegations trip, actually reflects the ongoing intense power struggle between the two sides. Both are trying to shift the pressure from the US onto their adversaries. Overall, with the Middle East deadlock unresolved, the USs current European diplomatic trip aims to demonstrate its continued diplomatic capability to advance major agendas. Ukraines earlier proposal to halt attacks on the Russian capital was essentially passing the buck to Russia, accusing Russia of undermining the negotiation process; Russias swift response, returning the buck, reflects that both Russia and Ukraine value the USs role, wanting to respond to US diplomatic considerations while simultaneously seeking US support for their own positions.

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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