ForexLive Asia FX news wrap: China April economic data collapses

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ForexLive Asia FX news wrap: China April economic data collapses

Yen crosses having a negative day with USD/JPY dropping sharply back under 129.00
    AUD/USD still dripping lower
    China coronavirus - Shanghai official says many restrictions to remain
    China data April Retail sales & Industrial production both plunge
    Weekend - Beijing extended guidance to work from home in four districts
    Oil has given up its earlier price gain
    AUD/USD gives back a few points (PBOC left the MLF rate unchanged)
    PBOC injects 100bn yuan via a 1-year MLF, unchanged rate of 2.85%
    PBOC sets USD/ CNY reference rate for today at 6.7871 (vs. estimate at 6.7852)
    Weekend - Goldman Sachs cut their US economic growth forecasts
    Japan data - April PPI +1.2% m/m (expected +0.8%) & +10% y/y (expected +9.4%)
    Weekend: The IMF lifted the yuan's weighting in its Special Drawing Rights currency basket
    South Korean fin min to meet with the head of the Bank of Korea re FX & the economy
    New Zealand Services PMI (April) 51.4 (prior was 51.6)
    Oil futures opening higher at the beginning of the week's trade
    Goldman Sachs' Blankfein says firms should be prepared for a recession.
    Brexit - UK PM Johnson says wants change from the EU on NI protocol - if not he will act
    German governing party defeated in bellwether state election
    Trade ideas thread - Monday 16 May 2022
    Weekend - China allowed a further cut in mortgage loan interest rates for some home buyers
    China coronavirus - Shanghai to gradually reopen businesses from Monday (there is a but)
    Monday morning open levels - indicative forex prices - 16 May 2022
    Newsquawk Week Ahead: US retail sales, China Data, ECB Minutes
    Iran says it can double its exports of oil
    ICYMI - Barclays warn of EUR/USD dropping under parity if  shuts off gas to Europe
    Unconfirmed reports that Kurdish forces have taken control of some oil wells in Iraq
    MUFG trade of the week: AUD/JPY to keep on falling
    This kind of thinking is a recipe for disaster


Chinese 'activity data' for April 2022 was published today. This data includes retail sales (-11.7% y/y in April), industrial production (-2.9% y/y), urban unemployment rate (6.1%) and more (see bullets above). Obviously, the data was impacted by the severe restrictions throughout the whole month in China's largest city and key economic powerhouse of Shanghai, and other eastern economically important cities. Ongoing lockdowns were a terrible problem for many economies in 2020 and into 2021. Its a shame China has not been able to address COVID-19 outbreaks as we have moved towards the middle of 2022.

    To markets. Early in the session we had a continuation of the bid seen on Friday for US equity index futures. Oil, too, began the new week trading up. AUD, NZD, GBP showed gains against the USD. All of this optimism was not long-lasting though. Even before the dreadful Chinese data these markets had begun to turn lower. Sentiment was not assisted by the People's Bank of China injecting 100bn yuan through a one-year Medium Term Lending Facility at an unchanged rate of 2.85%. There have been persistent expectations of rate cuts from the PBOC and these have been consistently dashed. Again, today. The unchanged rate on today's MLF makes a rate cut at the upcoming Loan Prime Rate setting, coming on Friday 20 May) from the PBOC unlikely.
USD/JPY turned lower on the session, dropping sharply back under 129.00. Yen crosses have thus been hit. AUD/JPY a big loser:

Source: ForexLive Asia FX news wrap: China April economic data collapses

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