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China Caixin services PMI for August 55.0 (expected 54.0)

Caixin / Markit Services and Compiste PMIs for August 2022

Services 55.0

expected 54.0

  • prior 55.5

Composite 53.0

  • prior 54.0

Some of the analysis from the report:

  • Rare high temperatures and sporadic Covid-19 outbreaks were the main factors weighing on the economy in August. The impact of the extreme weather was more significant than that of the outbreaks. The resulting power shortages greatly restricted manufacturing production, whereas service providers remained largely unaffected. The manufacturing sector benefited more from lower expenses as a result of falling commodity prices than the service sector.
  • Right now, the economy is slowly recovering from a widespread outbreak of Covid-19 in the first half of the year, though it remains under pressure. While the central bank has recently cut key policy interest rates to guide banks to lower financing costs for companies and individuals, the effect will depend on market players’ confidence about the future. In addition, with the increase in adverse factors such as recurring Covid-19 cases and natural disasters leading to a sluggish job market and shrinking consumer demand, the government should step up measures such as additional subsidies and assistance for low-income groups.

BOJ USD/JPY intervention – the level to watch is 142 to 143

But, what now?

  • “Any sharp near-term move to the 142/143 would probably spark a much sharper verbal protest from Japanese authorities and put intervention back on the agenda”

ING further note:

  • “Shorter-dated implied option volatilities … still around the 12% area (vs 15%+ a few months ago) suggesting investors have downscaled fears over possible Japanese FX intervention to sell USD/JPY.
  • While we all acknowledge that Japanese authorities would be trying to turn back the tide here (USD/JPY is above 140 for good macro reasons) we should not discount intervention completely”

Note – The Bank of Japan conducts intervention in the yen on instructions from the Ministry of Finance. Hence, its worthwhile having regard to MoF officials on yen movements. At ForexLive we headline these, so you can stay informed. We have had such comments from the MoF (and the BOJ and other government departments/ministers) quite often in recent months, mostly when the yen depreciates sharply. if you’ve been following along you’ll have noted these. So far its been hot-air, just verbal ‘intervention’. A sign of impending actual intervention activity in the forex market will be more strident comments from Japanese officials and more explicit threats of yen buying. We’ll keep on top of these if/when they come.

USD/JPY daily:

usdyen daily chart 05 September 2022

The Tulipomania

Quis furor, ô cives!—Lucan.

The tulip,—so named, it is said, from a Turkish word, signifying a turban,—was introduced into western Europe about the middle of the sixteenth century. Conrad Gesner, who claims the merit of having brought it into repute,—little dreaming of the commotion it was shortly afterwards to make in the world,—says that he first saw it in the year 1559, in a garden at Augsburg, belonging to the learned Counsellor Herwart, a man very famous in his day for his collection of rare exotics. The bulbs were sent to this gentleman by a friend at Constantinople, where the flower had long been a favourite. In the course of ten or eleven years after this period, tulips were much sought after by the wealthy, especially in Holland and Germany. Rich people at Amsterdam sent for the bulbs direct to Constantinople, and paid the most extravagant prices for them. The first roots planted in England were brought from Vienna in 1600. Until the year 1634 the tulip annually increased in reputation, until it was deemed a proof of bad taste in any man of fortune to be without a collection of them. Many learned men, including Pompeius de Angelis and the celebrated Lipsius of Leyden, the author of the treatise “De Constantia,” were passionately fond of tulips. The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the rarity of these flowers and the preposterous prices they paid for them. A trader at Harlaem was known to pay one-half of his fortune for a single root, not with the design of selling it again at a profit, but to keep in his own conservatory for the admiration of his acquaintance.

One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose—hardly the beauty of the “sweet, sweet-pea;” neither is it as enduring as either. Cowley, it is true, is loud in its praise. He says—
“The tulip next appeared, all over gay, But wanton, full of pride, and full of play; The world can’t shew a dye but here has place; Nay, by new mixtures, she can change her face; Purple and gold are both beneath her care, The richest needlework she loves to wear; Her only study is to please the eye, And to outshine the rest in finery.”
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