(12 AUGUST 2019) DAILY MARKET BRIEF 2：Equities consolidate as trade ware worries linger, USD/CNY rises to 7.07

Risky assets started the week off in a modestly positive posture with equity future-index blinking green across the screen with several Asian markets closed for a holiday. Chinese equities were better bid with the CSI 300 rising 1.80% on the back of a slightly dovish 2Q monetary report from the PBoC. On Monday, the Chinese central bank set the USD/CNY exchange rate to 7.0211, up 0.11% from Friday. Released on Friday, the report suggests that the PBoC will maintain an accommodative monetary policy stance and added that “Policies will be preset or fine-tuned based on changing situations, and attention will be paid to stabilize and guide expectations”. The monetary institution also left the door wide open for further yuan depreciation should the economic situation; understand here: if the trade war with the US worsens.

Against such a backdrop, safe haven assets slid in negative territory. The yellow metal fell 0.33% to $1,492, while silver gave up 0.63% to $16.88. USD/JPY rose 0.27% in early European trading, up to 0.9752. Only the Japanese yen appreciated against the greenback with USD/JPY falling 0.30% to 105.37, which suggests that trade war negotiations are keep investors on their toes.
Looking at the economic calendar, it is going to be a busy week. UK June labour data are due for publication on Tuesday (unemployment rate expected flat at 3.8%), together with the German ZEW (expected at -6.3 versus -1.1 previous) and US CPI (headline expected at 1.7%, up from 1.6% in June and core measure stable at 2.1%). On Wednesday, the UK, Germany, France and Sweden will publish their inflation data for the month of July. On Thursday, the US will release July’s retail sales figures and industrial production gauge.

.By Arnaud Masset