Asian Shares Mixed; Investor Focus Remains on Chinese Yuan Midpoint Fix

The People’s Bank of China fixed its midpoint for the yuan at 7.0136 against the dollar on Friday – the second time this week the benchmark was set weaker than 7. China’s consumer price index in July rose 2.8% on-year – its fastest year on-year pace since February 2018, according to data from the National Bureau of Statistics.
James Hyerczyk
Asian Shares Mixed

The major Asia Pacific stock indexes are trading mixed on Friday with China and Hong Kong posting losses. Market conditions are much calmer than earlier in the week, which suggests money managers may have priced in most of the negative events with hedges in safe-haven assets like Treasurys, the Japanese Yen and gold. Nonetheless, there are still heightened concerns over U.S.-China trade relations and their impact on the slowing global economy. Most of the focus for traders remains on China’s yuan fix and the psychological 7 yuan to the U.S. Dollar level.

At 07:24 GMT, Japan’s Nikkei 225 Index is trading 20684.82, up 91.47 or +0.44%. South Korea’s KOSPI Index is at 1937.75, up 17.14 or +0.89% and Hong Kong’s Hang Seng Index is trading 26037.26, down 83.51 or -0.32%.

In China, the Shanghai Index is trading 2774.75, down 19.80 or -0.71% and Australia’s S&P/ASX 200 Index is at 6584.40, up 16.30 or +0.25%.

Chinese Yuan Midpoint Fix

The People’s Bank of China fixed its midpoint for the yuan at 7.0136 against the dollar on Friday – the second time this week the benchmark was set weaker than 7. The onshore yuan last traded at 7.0506 against the greenback, and the offshore yuan moved at 7.0770 per dollar.

The PBOC allows the local currency to fluctuate against the greenback with a narrow band of 2% from each day’s midpoint. With 7.0136 the mid-point, the range is 7.1539 to 6.8733.

China Consumer Inflation Up

China’s consumer price index in July rose 2.8% on-year – its fastest year on-year pace since February 2018, according to data from the National Bureau of Statistics. Experts said that a 9.1% jump in food prices was behind the move, particularly surging pork prices.

Japan GDP Beats Forecast

Japan’s economy expanded for a third straight quarter in April-June, growing at an annualized rate of 1.8% in the period, according to government data on Friday. Economists were looking for a 0.4% gain. Capital expenditures also rose 1.5% against the previous quarter, while private consumption grew 0.6%.

RBA Chief Says Rate Cuts Still on Table

Reserve Bank of Australia (RBA) Governor Philip said Australia’s economy may have reached a “gentle turning point,” led by a tentative pick-up in home prices, tax cuts and a weaker Australian Dollar. Although he also said that more interest rate cuts were still possible.

However, the RBA’s quarterly statement of monetary policy, also released on Friday, was less upbeat with policymakers citing muted inflation and a rising unemployment.

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