ANNUAL SALE: EM currencies melt , Oil falls, Stocks tumble- Panic or Correction?
QUOTE: The first responsibility of a leader is to define reality. The last is to say thank you.
MARKET PULSE

  • Asian stocks tumbled with U.S. index futures, oil and EM currencies
  • Gauge of Chinese manufacturing plunged to the lowest since 2009
  • MSCI Asia Pacific Index down 2.4 %
  • Shanghai Composite Index fell 3 %, week's loss beyond 10 %.
  • About $2.2 trillion reduced from the value of global stocks in the first 4 days of the week.
  • KRW weakened 0.8 % Friday, its 5th drop in six days
  • MYR sank 1.3 % to a new 17-year low
  • China PMI was at 47.1 for Aug lower than forecast of 48.2 and 47.8 July
  • China bond funds had record redemptions and more than $4 billion
  • USD Futures indicate 32 % probability of Fed rate hike in Sep. down 48% Monday
  • Today: Germany GFK consumer confidence
  • Today EU, Germany and France Manu. PMIs, & EU area consumer confidence
  • Greek PM Tsipras announces he will step down with an eye to snap elections
  • Ten currencies that may follow Tenge in tumble triggered by CNY
  • Yellen's Fed faces a changed economic reality after July meeting
  • INR's strength is concerning as exports slumped for a 8th month in July
  • RBI's 36-currency trade weighted REER stood at 111.95 in July vs. 110.53 in June


INR
MARKETS

  • INR falls 0.4% to 65.82 per USD, down 1.2% so far this week,
  • INR declined for a second weekly drop in line with other Asian currencies
  • 1-month i volatility drops 2 bps at 7.7825%; average fort 12M is 6.6908%
  • INR 1-month forwards drop 0.4% to 66.18 per USD
  • Pivot point at 65.4104
  • USD/INR support at 65.2633, 64.9754 and 64.5404
  • USD/INR resistance broken at 65.6983, next at 65.8454 and 66.2804
  • USD/INR above upper Bollinger band at 65.7295

FACTORS

  • Indian Govt. has commenced budget formulation, Revenue Secretary Das
  • Indian Govt. to sell 5% stake, or 1.4 million shares, in Dredging Corp
  • Global investors sold net $44.4m of Indian stocks on Aug. 19
  • India's leading stock index Sensex down 1.2% yesterday
  • BoM: Lower commodity prices will benefit India which will engineer a rate cut
  • BoM: RBI Chief's efforts to build reserves has helped the INR by 5%
  • Nomura: Domestic economy and FX reserves will contain INR weakness due to CNY
  • Nomura: INR has the lowest sensitivity among Asia FX to CNY
  • GS: Current-account deficit remains muted amid lower oil and commodity prices
  • GS: We see fiscal deficit at less than 1% of GDP in fiscal 2016
  • INR's strength is concerning as exports slumped for a 8th month in July
  • RBI's 36-currency trade weighted REER stood at 111.95 in July vs. 110.53 in June



FOREIGN EXCHANGE
MARKETS

  • USD/JPY -0.28% at 123.05 (range 122.81-123.50)
  • EUR/USD +0.28% at 1.1274 (range 1.1230-1.1290)
  • AUD/USD -0.37% at 0.7310 (range 0.7287-0.7340)
  • USD/CAD +0.07% at 1.3096 (range 1.3077-1.3109)
  • GBP/USD -0.01% at 1.5688 (range 1.5681-1.5697)
  • USD/CHF -0.18% at 0.9569 (range 0.9563-0.9595)

FACTORS

  • Asian stocks tumbled with U.S. index futures, oil and EM currencies
  • Gauge of Chinese manufacturing plunged to the lowest since 2009
  • MSCI Asia Pacific Index down 2.4 %
  • Shanghai Composite Index fell 3 %, week's loss beyond 10 %.
  • About $2.2 trillion reduced from the value of global stocks in the first 4 days of the week
  • KRW weakened 0.8 % Friday, its 5th drop in six days
  • MYR sank 1.3 % to a new 17-year low
  • China PMI was at 47.1 for Aug lower than forecast of 48.2 and 47.8 July
  • China bond funds had record redemptions and more than $4 billion
  • USD Futures indicate 32 % probability of Fed rate hike in Sep. down 48% Monday
  • Today: Germany GFK consumer confidence
  • Today EU, Germany and France Manu. PMIs, & EU area consumer confidence
  • Greek PM Tsipras announces he will step down with an eye to snap elections
  • Ten currencies that may follow Tenge in tumble triggered by CNY
  • Yellen's Fed faces a changed economic reality after July meeting



GOLD
MARKETS

  • Gold spot rose 1.4 % to $1,168.39, highest since July 7,and was trading at $1,163.36 in Asia
  • Gold has surged 4.3 % this week and is set for the biggest such gain since January.
  • Gold is still 1.8 % lower this year. Prices dropped to $1,077.40 in July (5 year low)
  • China: Gold up 3 % to 241.82 CNY/gram ($1,175.40) on SGE, up for a 5th day.
  • Gold futures Dec up 0.9 % to $1,165. set for a 4.6 % advance this week.
  • Silver spot climbed 0.4 % to $15.6275

FACTORS

  • Fed may delay an interest rate increase as inflation remains low
  • Fed officials showed concern over low inflation, according to the minutes of last month FOMC
  • A gauge of Chinese manufacturing plunged to a six-year low on Friday