Ranges (Up till 12.

08pm HKT)
Currency

Currency

EURUSD

1.1370-1.1499

EURJPY

138.18-95

USDJPY

120.73-122.12

EURGBP

0.7246-0.7328

GBPUSD

1.5661-1.5702

USDSGD

1.4084-1.4168

USDCHF
AUDUSD

0.9364-0.9483
0.7201-0.7312

USDTHB
USDKRW

35.61-85
1196.1-1200.0

NZDUSD

0.6578-0.6685

USDTWD

32.887-998

USDCAD

1.3180-1.3257

USDCNH

6.4490-6.4745

AUDNZD

1.0926-74

XAU

1156.2-1165.3

Key Headlines
What a vugly day! One macro name said to me, if you
have the guts, get long Chinese equities now.
Asian stock markets got hammered, especially in
Mainland where Shanghai Composite dropped more
than 8% during first hour of session. No RRR cut from
China over the weekend.
Euro bought felt like it has joined UST as the safe
haven club.

FX Flows
Politely speaking, it was vugly. Rudelyfugly!
Asian stock markets got hammered, especially in
Mainland where Shanghai Composite dropped more
than 8% during first hour of session. No RRR cut from
China over the weekend. WSJ said cut could come before
the end of this month or early next month, most likely to
be 50bp. At one stage TAIEX dropped 7.2%, largest since
1990! ESU5 lost more than 2%.
E-Mini S&P Futures Sept Contract fell 0.5% at open and
continued to come under pressure. Heard decent volume
and all linked to stop sell orders. Futures continue to
weaken, down 2%.
UsdJpy was at 122.12 right at the official open then fell to
121.67. One FX reporter said there were stops triggered
at 121.80, from last Friday. UsdJpy tanked again
following weak S&P Futures; same reporter again
mentioned stop loss selling at 121.50. Usd touched 121.17
briefly then bounced back fiercely to 121.70s. A rumour
of buying from importers but think its pure speculation.
Shanghai opened down and UsdJpy bear continued.
Usd strengthened against most EM currencies South
African Rand weakened to 13.70 from opening of
12.9655; down 5.6%. The pair did print 14.0000 but we
think highly likely to be human error.
Back to buying Eur crosses especially against the Asians
and Aud. From price action, felt like Euro is new safe

haven. Euro punched through 1.1400 without a problem,

not that I was expecting offers. Market scrambled for
offers, heard demand from systematic accounts and took
the EurUsd up to 1.1458. We sold decent amount for real
money after the high liquidity is not great. Euro
backed off little 1.1425; fresh buyers returned and took
out the previous high 1.1467 on May 15. Traders saw
good offers planted in e-platform ahead of 1.1500.
Risk-off and AudJpy sold. EurAud was bought as well.
Amid weak oil and risk-off environment, the Canadian
dollar weakened to 1.3257. Offers are light until we get to
1.3285-95 where corporate offers come in.
Usd strengthened against most EM currencies Reuters
News reported a headline that Korean authorities were
defending UsdKrw at 1200.
UsdThb also got to new high, 35.85 with agent banks
slowing the pace.
UsdTwd 1s NDF got to multi-year high 33.140. At one
stage TAIEX dropped 7.2%, by end of morning, -4.5%.
UsdSgd ran into resistance in region of 1.4160-65. Some
chatter of SgdMyr demand but think this level may not
sustain.

Who said what

Denmark: Lowers 2015 GDP forecast to 1.5% vs 1.7% in
May
Denmark: Sees 2016 GDP growth at 1.9% vs 2% in May
Denmark: Sees wider budget deficit at 2.7% of GDP vs
1.3% est. in May
Moodys: Greek PM resignation is credit positive for
sovereign
Japan PM Abe: Economy in positive cycle, not in
deflation
Japan PM Abe: Abenomics has lifted dark, heavy
atmosphere from economy
Japan Amari: Japanese stocks reflect global selloff
starting in China
Japan Abe: Understands that drop in oil price made
hard for BOJ to reach 2% inflation target
RBNZ: Cant use monetary policy for housing if it
deviates from inflation goal
RBNZ: Signs of housing demand spilling out of
Auckland
RBNZ: Spill could delay removal of LVR limits

News & Data

Larry Summers in FT: The Fed looks set to make
a dangerous mistake

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

Like most major central banks, the Fed has put its price
stability objective into practice by adopting a 2 per cent
inflation target. The biggest risk is that inflation will be
lower than this a risk that would be exacerbated by
tightening policy. Tightening policy will adversely affect
employment levels because higher interest rates make
holding on to cash more attractive than investing it.
Higher interest rates will also increase the value of the
dollar, making US producers less competitive and
pressuring the economies of our trading partners.
http://www.ft.com/intl/cms/s/2/f664a7e0-4978-11e5b558-8a9722977189.html#axzz3jfG9rDXX
WSJ: The Fed Has a Theory. Trouble Is, the
Proof Is Patchy
Federal Reserve officials might raise interest rates soon
because they have a theory: Falling unemployment
pushes up prices and wages, requiring tighter credit to
keep inflation in check. What they dont have is proof
that the theory has worked consistently in the past, or
evidence its working now.
http://www.wsj.com/articles/the-fed-has-a-theorytrouble-is-the-proof-is-patchy-1440352846?
mod=wsj_nview_latest
Reuters News: Denmark says suspension of gov't
bond issuance to continue
Denmark's government said it would continue a policy of
not issuing bonds for the foreseeable future, according to
a finance ministry paper seen by Reuters on Sunday. The
previous government stopped issuing bonds earlier this
year as a way of keeping control of the crown currency's
peg to the euro. By scrapping new debt issuance, it
dampened demand for the Danish currency and
preserved its peg to the euro.
http://www.reuters.com/
Telegraph: UK Business tsar backs plea for
business rates cut
The Governments business tsar has backed an
emphatic call from the nations retailers for a
fundamental reform of business rates to boost Britains
productivity. Sir Charlie Mayfield, chairman of the John
Lewis Partnership and president of the British Retail
Consortium (BRC), has thrown his weight behind a
chorus of complaints from the bosses of Britains high
street traders that the hefty business rates tax is
hampering investment in the sector. An overwhelming
95pc of 100 UK retail bosses surveyed by the BRC said
that a reform of business rates would boost the nations
productivity.
http://www.telegraph.co.uk/finance/newsbysector/retai
landconsumer/11815278/Business-tsar-backs-plea-forbusiness-rates-cut.html

SCMP: Bumpy road for China stocks as pension

fund gets investment go-ahead
The State Council said on Sunday that it will allow
Chinas pension fund to invest up to 30 per cent of its
total 3.5 trillion yuan in net assets in equities and stocks,
a likely bid to support the flagging market that billions of
yuan in injected liquidity over the past week has failed to
revive. The much anticipated move from the top
decision-making body was aimed at boosting returns at
the fund, which has so far been limited to low-yielding
treasury notes and bank deposits, Xinhua news agency
reported.
http://www.scmp.com/news/china/economy/article/18
51836/bumpy-road-ahead-seen-china-and-hong-kongequity-markets
Xinhua News: Premier urges stronger advanced
manufacturing
Chinese Premier Li Keqiang on Sunday urged faster and
stronger development of the country's advanced
manufacturing to fuel the slowing down economy. As a
pillar industry, China's manufacturing should become
high-end and more intelligent through nationwide startups and innovation, said Premier Li while chairing a
State Council meeting.
http://news.xinhuanet.com/english/201508/23/c_134547113.htm
WSJ: Foreign Car Factories Curb Output in
China
New weakness in the worlds largest car market has led
companies such as General Motors Co. and Volkswagen
AG to run their plants there at less than full capacity for
the first time, according to industry data. The global auto
makers, which have been some of the biggest
beneficiaries of Chinese consumers increasing appetite
for upscale goods, have already announced a slowdown
in sales there as the economy cools. Though the auto
makers expect the market to grow over the long-term,
the production curb suggests the easy boom times are
over, signaling a bumpier ride for global companies that
made large bets on soaring Chinese demand.
http://www.wsj.com/articles/foreign-car-factories-curboutput-in-china-1440358381?mod=wsj_nview_latest
The Guardian: Is the game up for Chinas much
emulated growth model?
The current skittishness in emerging markets is the
fallout of what is happening in China. This is hugely
important, not just because of Chinas major role in
global trade, but because it signifies the end of a
particular growth strategy that many other countries
were trying to emulate.
http://www.theguardian.com/commentisfree/2015/aug
/23/china-growth-model-brics?CMP=twt_gu

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

FT: Angry investors capture head of China

metals exchange
The head of a Chinese exchange that trades minor metals
was captured by angry investors in a dawn raid and
turned over to Shanghai police, as the investors
attempted to force the authorities to investigate why
their funds have been frozen. The exchange began to
experience liquidity problems this spring. Fanya is
estimated to hold several years supply of minor metals
used in some high-tech and military applications, which
it purchased at above-market prices.
http://www.ft.com/intl/cms/s/0/02a129cc-4995-11e59b5d-89a026fda5c9.html?ftcamp=published_links
%2Frss%2Fhome_us%2Ffeed%2F
%2Fproduct#axzz3jfG9rDXX
WSJ: China Poised to Raise Banks Liquidity to
Boost Lending
The Peoples Bank of China is preparing to flood the
countrys banking system with new liquidity to boost
lending, according to officials and advisers to the central
bank, as a weaker currency could spur more funds
leaving Chinese shores. The stepwhich involves cutting
the deposits banks are required to hold in reserve
would signal that the Chinese central banks exchangerate manoeuvring in the past two weeks is backfiring,
forcing it to resort to the same easing measures that so
far have failed to help spur economic activity. The move,
which the people say could come before the end of this
month or early next month, would involve a halfpercentage-point reduction in the reserve-requirement
ratio, they say, potentially releasing 678 billion yuan in
funds for banks to make loans.
http://www.wsj.com/articles/china-poised-to-boostbanks-liquidity-to-counter-weaker-yuan-1440325663
Nikkei: Canon primed to spend 400bn yen on
acquisitions in robotics, life sciences
Canon will pour up to 400 billion yen ($3.2 billion) into
purchasing companies in new business segments as part
of a broader push to expand beyond digital cameras and
office equipment. The Japanese manufacturer will aim to
generate sales of 1 trillion yen from such new fields as
robotics and life sciences in 2020. In an interview with
The Nikkei, CEO Fujio Mitarai outlined the company's
strategy for the upcoming business plan covering 2016
through 2020.
http://asia.nikkei.com/Business/Deals/Canon-primedto-spend-400bn-yen-on-acquisitions-in-robotics-lifesciences

threats could raise questions about Washington's

commitment to the defense of the Asian ally, a U.S.
expert said.
http://english.yonhapnews.co.kr/national/2015/08/24/
52/0301000000AEN20150824000400315F.html
FT: Swiss launch criminal inquiry related to
Malaysias 1MDB
Attempts by Najib Razak, Malaysias embattled prime
minister, to contain a financial scandal have taken a
knock after Swiss authorities said they had opened
criminal proceedings related to the state development
fund at the centre of the affair. Switzerlands Office of the
Attorney-general said its case involved suspected
corruption of public foreign officials, dishonest
management of public interests and money laundering.
http://www.ft.com/intl/cms/s/0/b877e1fe-4969-11e59b5d-89a026fda5c9.html#axzz3jfG9rDXX
FT: Trump turns fire on hedge fund managers
Donald Trump on Sunday turned his fire on hedge fund
managers, calling them paper-pushers who do not pay
their fair share of tax, in the latest attack of his
bombastic presidential campaign. Mr Trump indicated
he would close a loophole that lets hedge fund and
private equity managers pay taxes at a lower capital
gains rate instead of as income tax. Trump said he would
not be deterred by his relationships with hedge fund
managers. Some of them are friends of mine, some of
them I couldnt care less about, he said. Its the wrong
thing. These guys are getting away with murder. I want
to lower the rates for the middle class.
http://www.ft.com/intl/cms/s/0/cc67209e-49d2-11e59b5d-89a026fda5c9.html?ftcamp=published_links
%2Frss%2Fhome_us%2Ffeed%2F
%2Fproduct#axzz3jfG9rDXX
Times: CBI upgrades growth on back of rising
investment
In its latest health check of the economy, and in advance
of the chancellors spending review in November, the
CBI upgraded its estimate for growth this year from 2.4
per cent to 2.6 per cent, and from 2.5 per cent to 2.8 per
cent for next year.
http://www.thetimes.co.uk/tto/business/economics/arti
cle4536102.ece

Yonhap News: Suspension of S. Korea-U.S.

exercise could raise doubts about U.S.
commitment
Last week's temporary suspension of the U.S.-South
Korea joint military exercise in the face of North Korean
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.