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June 16 – A press conference for the 17th Annual Meeting of the New Champions of the World Economic Forum, also known as the Summer Davos Forum, will be held in Beijing today. The 2026 Summer Davos Forum is scheduled to be held in Dalian, Liaoning Province, from June 23 to 25. Participants come from more than 90 countries and regions worldwide, with total registered participants exceeding 1,700, setting a new record. The forum, themed "Innovation at Scale," will focus on a series of topics related to global innovation trends and industrial transformation and upgrading, gathering wisdom from various sectors to inject momentum into promoting global economic recovery and sustained growth.On June 16th, Li Auto (02015.HK) held its Livis Day software and embodied intelligence launch event in Beijing. Li Auto officially proposed a complete definition of an embodied intelligent vehicle: an intelligent agent possessing the capabilities of an electric vehicle, a professional driver, an AI computer, and a life assistant. Based on this definition, the event systematically showcased the next-generation Li Space interactive experience, its self-developed embodied intelligence model, the worlds first dynamic dataflow AI chip, Mach M100, embodied intelligence products and experiences, and released OTA growth milestones covering the entire year. Li Xiang, Chairman and CEO of Li Auto, stated that Li Autos self-developed Mach M100 chip will achieve mass production and deployment in vehicles in May 2026, becoming the worlds first mass-produced dynamic dataflow AI chip. With the mass production and deployment of the Mach M100, Li Auto has achieved full-stack self-development of chips, compilers, operating systems, AI algorithms, and domain controllers.1. Interest Rate Adjustment – The market widely expects the Bank of Japan to raise interest rates by 25 basis points to 1%, the highest level in 31 years. The Bank of Japans last rate hike will be in December 2025. 2. Voting Participation – The governor was absent due to illness, and only 8 people voted at this meeting. In the event of a 4-4 tie, Deputy Governor Ryozo Himino, who chaired the meeting, will have the decisive vote. 3. Voting Ratio – The market widely expects all voting members to support the rate hike; however, Toshiro Asada, who holds a reflationary stance, may not support the rate hike, and some may propose a 50 basis point increase. 4. Forward Guidance – The market is focused on whether the Bank of Japan will adjust its forward guidance. The current wording is "Given that real interest rates are at a significantly low level, the central bank will continue to raise interest rates and adjust the degree of monetary easing." 5. Cessation of QT – Japanese media reports that the Bank of Japan will announce that it will stop reducing the monthly bond purchase program starting next April. This move may be seen as a "political deal with the government" and will affect the Bank of Japans independence. 6. Press Conference – The Bank of Japan Governor was absent due to illness, and Deputy Governor Shinichi Uchida held a press conference on his behalf. The market is focused on whether Uchida will hint at a possible second consecutive interest rate hike in July and his views on bond-buying policy.Chinas May industrial value-added and total retail sales of consumer goods year-on-year figures will be released in ten minutes.On June 16th, it was reported that the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.4500%, and the lowest was 0.7030%; the highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.0230%, and the lowest was 1.0000%; and the highest 7-day annualized yield of Alipays "Yuebao" was 1.0210%, and the lowest was 1.0000%.

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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