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On January 13, the Guangzhou Municipal Bureau of Industry and Information Technology publicly solicited opinions on the "Several Policies of Guangzhou Municipality on Promoting the High-Quality Development of the Integrated Circuit Industry Across the Entire Chain During the 15th Five-Year Plan Period (Draft for Solicitation of Opinions)". The draft mentions accelerating breakthroughs in the design of high-end general-purpose chips such as processors, memory chips, and edge computing chips; actively supporting the development of specialized chips such as RISC-V (an open-source instruction set architecture based on the principle of reduced instruction set), automotive-grade, display drivers, sensors, optical communication, and 6G; strengthening support for the first-round tape-out of integrated circuit companies products; and providing subsidies of up to 50% of the tape-out cost to qualified companies that conduct tape-out of 28nm and below chips with independent intellectual property rights or significant competitive advantages.On January 13th, Futures News reported that recent frequent protests in a Middle Eastern country, resulting in hundreds of deaths, have raised concerns about potential US military intervention. This has led to a return of geopolitical premiums and a continuous rise in crude oil prices for several days, with a cumulative increase of $5 per barrel. Zhuochuang Information predicts that while the situation in South America is generally under control, the situation in the Middle East remains unclear. The US is inclined towards military intervention, while the Middle East is seeking negotiations. The market is generally cautious, and any conflict will likely push up oil prices. Oil prices are more likely to rise than fall, and caution is advised regarding the risk of a sudden surge in oil prices due to military intervention.On January 13, at the ceremony marking the production of the 1 millionth Seres vehicle, Zhang Xinghai, Chairman of the Seres Group, announced that the first million-vehicle sales of the Wenjie brand were achieved after five years. In the next two years, the company will strive to achieve the second million-vehicle target, namely, an average annual sales volume of over 500,000 vehicles from 2026 to 2027.Citigroup says silver will continue to outperform gold.On January 13th, Morningstar analyst Jeff Zhang stated in a report that Pop Marts domestic revenue growth may slow in the fourth quarter. He indicated that due to a "high base and delays in the launch of new plush keychains featuring its flagship IPs," the companys overall revenue growth in the Chinese market in the fourth quarter may be lower than in the third quarter. He added that some Labubu products are experiencing inventory backlogs in certain retail stores, indicating that market interest in older products is waning. Morningstar maintains its fair value estimate for the stock at HK$280. "After the recent sharp decline in share price, Pop Marts valuation is now attractive, and we believe the markets concerns about its short-term revenue fluctuations are excessive."

Investor attention is on the Fed's minutes as recession fears drive the US Dollar Index towards 107.00

Daniel Rogers

Aug 16, 2022 11:47

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The US Dollar Index (DXY) rises for a third day in a row during Tuesday's Asian session, gaining bids to 106.58. Thus, the greenback's signal captures the market's rush for risk-free assets in response to worries about the US and China's economies as well as worries about geopolitics in the Middle East, China, and Russia. It is noteworthy that aggressive Fed remarks and weaker US data enhance market trepidation and help DXY bulls.

 

Despite this, the DXY bulls closely monitor the gloomy statistics coming out of China and the US, particularly in light of the recession fears.

 

In August, the US NY Empire State Manufacturing Index fell from 11.1 in July to 31.3, below market estimates of 8.5. The August NAHB homebuilder confidence index in the US fell from 55 to 49, the lowest level since the start of 2020.

 

In other news, China's retail sales slowed in July to 2.7% YoY from 3.1% earlier and 5.0% forecast, while industrial production (IP) fell to 3.8% from 3.8% previously and 4.0% market estimates. Additionally, in an effort to counter bearishness, the People's Bank of China (PBOC) shocked the markets on Monday by reducing the rates on its medium-term lending facility (MLF) by 10 basis points (bps).

 

It should be emphasized that news stories about deteriorating coronavirus conditions in Shanghai, China's financial center, and the restart of Russian bond trading on Wall Street did not spur investors' desire to take risks. The Wall Street Journal's (WSJ) rumors of a potential meeting between US Vice President Joe Biden and his Chinese counterpart Xi Jinping may also encourage investors to take more risks. In a similar vein, Chinese President Xi proposed new efforts to revive the second-largest economy in the world.

 

The Pentagon said on Monday that the US, South Korea, and Japan took part in a missile warning and ballistic missile search and tracking exercise last week off the coast of Hawaii. Between August 22 and September 1, the US and South Korea will collaborate on military drills. The DXY rises as a result of the additional stress that geopolitical worries place on market sentiment.

 

The three-day downtrend in US 10-year Treasury yields is around 2.775%, while S&P 500 Futures are down at least 0.13 percent day-to-day.

 

Moving on, the secondary US housing and activity data released today should be of interest to DXY traders ahead of the release of the FOMC Minutes on Wednesday. The dollar's gauge might remain on the bear's radar if US data keep getting worse.

 

The three-week-old resistance line, which is now support at 106.35, would need to be broken for an extended period of time for DXY bulls to hit the monthly high above 107.00. However, in order to approach July's yearly high close to 109, the bulls need confirmation from late July's peak at 107.45.


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