US: FED Reverse Repo Operation
RRP usage inches up to $328.472B from $324.494B Tuesday -- compares to $286.660B on Wednesday, Aug 7 -- the lowest since mid-May 2021. Number of counterparties climbs up to 66 from 62 prior.
NY Federal Reserve/MNI
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CHINA-EU: Germany Appears Set To Abstain From EU Vote On Imposing China Tariffs
MNI London: Wires carrying comments from German Minister for Economic Affairs and Climate Action, Robert Habeck, ahead of a Monday midnight deadline for all 27 EU members states to declare their position on imposing EU tariffs on Chinese electric vehicles.
- Habeck said: “Germany contributed to discussion on duties on EVs from China without making a decision... It is crucial to seek a rapid and consensual solution with China.”
- Habeck added: “Only when decision on final tariffs is made is a decision by EU member states important, as it is legally binding.”
- Reuters reports that, "Italy and Spain are backing European Union tariffs on imports of China-built electric vehicles..."
- Reuters notes: "The vote is non-binding, but it could influence the final conclusion of the European Commission, which oversees the bloc's trade policy. It set provisional duties of up to 37.6% on EVs imported from China, ratcheting up tensions with Beijing."
- Habeck said last week: “A race over tariffs is wrong. Wrong for an export nation like Germany, wrong for an automotive nation like Germany, but ultimately also wrong for consumers.”
- Bloomberg notes that, “competition from China is undercutting German prices in nearly all areas of production. While average Chinese EV prices decreased to €32,000, Germany’s average EV price increased over the past years to €52,700. Support for German carmakers could come from the EU’s announced tariffs against Chinese EV’s — if there weren’t the potential counter tariffs from China.”
US: FED Reverse Repo Operation
RRP usage inches up to $413.280B from $406.590B on Friday. Number of counterparties drops to 65 from 73 prior. Today's usage compares to $327.066B on Monday, April 15 -- the lowest level since mid-May 2021.
NY Federal Reserve/MNI
FOREX: USDJPY Completes Round Trip Post-Powell, NZD Weakness Persists
- USDJPY has unsurprisingly posted the largest range across the majors on Monday, as volatility remains high in the aftermath of last week’s US data and supposed BOJ intervention. Chair Powell described the latest data as adding to the FOMC’s confidence, which prompted a momentary blip lower for the greenback.
- USDJPY trades close to unchanged around 157.90. The pair reached as low as 157.19 following Powell’s remarks, having printed an overnight high of 158.42 during the APAC session. Most notable support remains at 156.83, a Fibonacci retracement.
- NZD underperforms across G10, falling 0.57% against the dollar as weaker-than-expected China GDP weighs at the margin. The AU-NZ 2yr swap continues to tick higher, now back at November 2020 levels which continues to bolster the AUD/NZD rally, rising to a fresh cycle high of 1.1136.
- EURUSD tracks close to 1.0900 and 1.30 continues to cap the topside in GBPUSD, a level that would place cable at the highest level since July last year.
- Scandinavian FX underperforms, with USDNOK trading 0.95% higher on Monday. In similar vein, there were some notable laggards in the EM space such as MXN, dropping over 1% given its beta to Trump election odds and ZAR falling 1.5%.
- Eurozone Trade and German ZEW data crosses on Tuesday, before US retail sales and Canadian CPI highlight the economic calendar.
