MNI EUROPEAN OPEN: Trump/Zelenskyy Meeting In Focus

EXECUTIVE SUMMARY

• EUROPEANS TO BACK ZELENSKIY IN WASHINGTON AS TRUMP PRESSES UKRAINE DEAL - RTRS
• US, RUSSIA AGREED ON UKRAINE SECURITY PLEDGES, WITKOFF SAYS - BBG
• CHINA’S CAPITAL OUTFLOWS HIT RECORD AMID LIBERALIZATION PUSH - BBG
• A FORMER RBA STAFFER ON THE CASH RATE OUTLOOK - MNI 

Fig 1: Oil Price Benchmarks - Near Recent Lows 

Source: MNI - Market News/Bloomberg/Refinitiv. 

UK

HOUSE PRICES (BBG): "UK home prices are almost £11,000 ($14,900) cheaper than three months ago, with sellers competing for attention during the market’s summer lull." 

EU

UKRAINE (RTRS): “European leaders will join Volodymyr Zelenskiy to meet Donald Trump in Washington, they said on Sunday, seeking to shore up Zelenskiy's position as the U.S. president presses Ukraine to accept a quick peace deal to end Europe's deadliest war in 80 years.” 

UKRAINE (BBG): “Volodymyr Zelenskiy finds himself in an impossible bind: risk Donald Trump’s wrath or accept a quick deal to end Russia’s war in Ukraine by paying the disastrous price of ceding territory for vague security guarantees that could see Moscow come back stronger in a few years’ time.” 

RUSSIA (RTRS): “Russia would relinquish tiny pockets of occupied Ukraine and Kyiv would cede swathes of its eastern land which Moscow has been unable to capture, under peace proposals discussed by Russia's Vladimir Putin and Donald Trump at their Alaska summit, sources briefed on Moscow's thinking said.” 

UKRAINE (BBC): “"We see that Russia rebuffs numerous calls for a ceasefire and has not yet determined when it will stop the killing. This complicates the situation," the Ukrainian president said in a statement on X.”

EU/RUSSIA (POLITICO): “European Commission President von der Leyen announced on Sunday that the European Union’s 19th package of sanctions against Russia is set to be unveiled in early September. “As long as the bloodshed in Ukraine continues, Europe will maintain diplomatic and, in particular, economic pressure on Russia,” von der Leyen said during a joint press briefing with Ukrainian President Zelenskyy.”

EU/RUSSIA (POLITICO): “In a statement shared with POLITICO, Kaja Kallas, the bloc’s high representative for foreign affairs and security policy, welcomed Trump’s “resolve to get a peace deal” after he held talks with Russian President Vladimir Putin in Alaska on Friday. “But the harsh reality is that Russia has no intention of ending this war anytime soon,” she blasted.”

GERMANY (POLITICO): “During the closely watched one-on-one meeting in Alaska on Friday, Trump moved “within the line” he had discussed with EU leaders earlier in the week, Merz said in an interview with German public broadcaster ARD. “And I think that is good progress … despite the one or two disturbing images we may have seen,” Merz said. “The press in Russia is jubilant. A little less would also have been enough,” he added.”

GERMANY (DW): “A new poll for Bild am Sonntag newspaper revealed that more than two-thirds of Germans expect one of the country's state premiers to come from the far-right Alternative for Germany (AfD) party by next year.”

SERBIA/RUSSIA (BBC): “The offices of the ruling Serbian Progressive Party (SNS) have been set on fire during a fifth night of unrest in a row that saw fresh clashes between anti-government protesters and riot police. It comes as Russia pledged to assist the beleaguered pro-Moscow President Aleksandar Vučić, who leads the SNS, saying it would not "remain unresponsive".”

US

US/UKRAINE (BBG): “ Donald Trump and Vladimir Putin agreed at their summit in Alaska last week that the US would be able to offer security guarantees to Ukraine, according to Steve Witkoff, Trump’s special envoy, even as many details of Friday’s meeting remain unclear.” 

US/UKRAINE (POLITICO): “In a series of interviews on Sunday, Rubio said progress was made at the Alaska meeting between Trump and Putin, but a ceasefire has yet to be agreed upon.”

OTHER

MIDDLE EAST (RTRS): “Palestinian militant group Hamas said on Sunday that Israel's plan to relocate residents from Gaza City constitutes a "new wave of genocide and displacement" for hundreds of thousands of residents in the area.” 

NEW ZEALAND (BBG): “New Zealand‘s long-term issuer default rating was affirmed by Fitch at AA+.” 

NEW ZEALAND (BBG): "The RBNZ Shadow Board recommends a 25 basis point cut for the Official Cash Rate this week, the NZ Institute of Economic Research says Monday in Wellington." 

AUSTRALIA (MNI): A former RBA staffer shares his cash rate outlook.  On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

CHINA 

STOCKS (SECURITIES TIMES): “ More than ten banks across China have reiterated that credit card funds are strictly prohibited from flowing into equities and other investment channels amid surging A-share trading, the Securities Times reported.”

CAPITAL FLOWS (BBG): “China’s capital outflows rose to a record in July, driven by mainland investors’ aggressive buying of Hong Kong assets following new market liberalization measures.”  

MONETARY POLICY (PBOC): "The People’s Bank of China will maintain a moderately accommodative monetary stance in Q2, with the priority on stabilising employment, businesses, markets, and expectations, the central bank's latest quarterly report said. " 

MNI: PBOC Net Injects CNY154.5 Bln via OMO Monday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY266.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY154.5 billion after offsetting maturities of CNY112 billion today, according to Wind Information
 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4393% at 09:38 am local time from the close of 1.4798% on Friday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 47 on Friday, compared with the close of 52 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
•  

MNI: PBOC Sets Yuan Parity Lower At 7.1322 Mon; -0.62% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1322 on Monday, compared with 7.1371 set on Friday. The fixing was estimated at 7.1812 by Bloomberg survey today.

MNI: China CFETS Yuan Index Up 0.13% In Week of Aug 15

The CFETS Weekly RMB Index was 96.17 on Aug 15, up 0.13% compared with 96.04 as of Aug 8.

MARKET DATA

UK AUG. RIGHTMOVE HOUSE PRICES -1.3% M/M; JUL -1.2%
UK AUG. RIGHTMOVE HOUSE PRICES +0.3% Y/Y; JUL +0.1%

NEW ZEALAND BNZ JULY SERVICES PSI 48.9; JUN 47.6

MARKETS

US TSYS: Asia Wrap - Yields Leak Lower

The TYU5 range has been 111-19 to 111-24 during the Asia-Pacific session. It last changed hands at 111-23+, up 0-04+ from the previous close. 

• The US 2-year yield has edged lower trading around 3.742%, down 0.01 from its close.
• The US 10-year yield has edged lower trading around 4.304%, down 0.01 from its close.
• Yields extended higher on Friday, approaching the pivotal resistance area within the greater 4.10%-4.65% range. The 4.35% area in 10-Year yields should still see demand initially, but the way the market keeps bouncing off levels just below 4.20% will be disconcerting for longs..
• Fortune - “Wall Street overwhelmingly expects the Federal Reserve to cut rates next month, and Chairman Jerome Powell’s speech on Friday will give him a chance to hint at which direction policymakers are headed. But some analysts don’t think a September rate cut is in the bag, and even some that do expect a cut are doubtful that Powell will tease it at Jackson Hole.”
• Daily Chartbook on X: "On the surface: steady and solid consumer momentum. Under the hood: a rising share of sales growth is being 'paid for' by inflation."@Econ_Parker. See Fig.1 Below.
• Data/Events:  New York Fed Services Business Activity, NAHB Housing Starts

Fig 1: Retail & Inflation

Source: MNI - Market News/@dailychartbook/Arch

JGBS: Modest Bear-Steepener Ahead Of Tomorrow's 20Y Supply

JGB futures are weaker, -15 compared to settlement levels

• Japan tertiary industry index rose 0.5% in June from a month earlier, compared to economists’ estimate at +0.2%.
• Cash US tsys are 1-2bps richer in today's Asia-Pac session after Friday's bear-steepener.
• (Bloomberg) "Japanese bonds are in for a rough week with Tuesday's 20-year debt sale looming as the next curve disruptor. It's a tricky tenor, neither a benchmark, nor an ultra-long. The duration is one of the least popular for investors with a history of sloppy outcomes which scatter the JGB playing field. Secondary JGB levels don't help either. Buyers at the seven previous auctions this year are underwater on a mark-to-market basis. Even sharply reducing the size of the July debt sale barely improved its overall metrics. Which augurs badly for this week when there is also Japanese CPI data on Friday that is unlikely to knock the BOJ off its rate hike path."
• Cash JGBs are flat to 3bps cheaper across benchmarks. The benchmark 10-year yield is 0.5bp higher at 1.577% versus the cycle high of 1.616%.
• Swap rates are flat to 1bp lower, with swap spreads tighter.
• Tomorrow, the local calendar will see 20-year supply.

AUSSIE BONDS: Cheaper But Off Cheaps

ACGBs (YM -2.5 & XM -4.5) are weaker but off cheaps on a data-light session.

• (Bloomberg) “Some 42% of respondents named US tariffs as their top concern compared with 37% who cited the strategic threat from China, according to a Newspoll published Monday in The Australian. A further 21% said neither bothered them, the survey conducted Aug. 11-14 for the newspaper showed.”
• Cash US tsys are 1-2bps richer in today's Asia-Pac session. This week's US calendar includes residential sector data (housing starts, homebuilder sentiment, existing home sales) and flash August PMI data as well as a few Fed speakers (notably Waller and Bowman) ahead of Friday's keynote speech by Fed Chair Powell as part of the annual Jackson Hole symposium Aug 21-23.
• Cash ACGBs are 3-4bps with the AU-US 10-year yield differential at -4bps.
• The bills are -1 to -3, with the strip steeper.
• RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in September is given a 28% probability, with a cumulative 36bps of easing priced by year-end.
• Tomorrow, the local calendar will see Westpac Consumer Confidence.
• This week, the AOFM plans to sell A$1500mn of the 1.25% 21 May 2032 bond on Wednesday and A$300mn of the 4.75% 21 June 2054 bond on Friday.

BONDS: NZGBS: Cheaper But A Subdued Start To A RBNZ Policy Week Week

NZGBs closed slightly off worst levels, 2bps cheaper, after a relatively subdued start to the week.

• NZ-US and NZ-AU 10-year yield differentials closed 1-2bps tighter.
• RBNZ publishes Tara-ā-Umanga Business Expectations Survey, for September quarter. Average 1-year ahead inflation expectation rises to 2.53% from 2.44% in 2q. 2-year rises to 2.64% from 2.54%. 5-year rises to 3.16% from 3.06%. 10-year falls to 3.57% from 3.94%.
• NZGBs held by international investors increased to 62.8% from a month earlier (62.7%) in July.
• The highlight of the week will be Wednesday's RBNZ decision, where the MPC is likely to cut rates 25bp to 3% after pausing in July. It will also release updated forecasts, and Governor Hawkesby will hold a press conference. On Thursday, he will appear before a parliamentary committee to talk about the latest Monetary Policy Statement
• Swap rates closed 2-3bps higher.
• RBNZ dated OIS pricing closed little changed across meetings. 23bps of easing is priced for this week, with a cumulative 41bps by November 2025.
• Tomorrow, the local calendar will see PPI data.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 4.50% May-35 bond and NZ$50mn of the 1.75% May-41 bond.

FOREX: Asia FX Wrap - USD Starts The Week Soft

The BBDXY has had a range of 1201.04 - 1203.32 in the Asia-Pac session, it is currently trading around 1202, -0.05%. The USD drifted lower again going into the weekend back towards its support just below 1200. This is clearly the side the market is more comfortable trading. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows.

• EUR/USD -  Asian range 1.1694 - 1.1716, Asia is currently trading 1.1705. The market moved very quickly back to 1.1700 where it stalled on its first attempt to challenge this area. The pair continues to consolidate around 1.1700 trying to build momentum to again move towards the year's highs.
• GBP/USD - Asian range 1.3549 - 1.3567, Asia is currently dealing around 1.3560. Having broken back above its pivot look for dips to again be supported, first support seen now back towards 1.3400/1.3500.
• USD/CNH - Asian range 7.1818-7.1891, the USD/CNY fix printed 7.1322, Asia is currently dealing around 7.1820. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
• Cross asset : SPX +0.15%, Gold $3355, US 10-Year 4.305%, BBDXY 1202, Crude Oil $62.92
• Data/Events : Spain Trade Balance, EZ Trade Balance

Fig 1: BBDXY Spot 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: Asia Wrap - USD/JPY Bouncing Off Support, Leveraged Funds Bought The Dip

The Asia-Pac USD/JPY range has been 147.08-147.58, Asia is currently trading around 147.40, +0.15%. USD/JPY again found good demand on a 146 handle. Price continues to hold above the support area between 146.00/147.00, a sustained move below this support is needed to turn the momentum potentially lower again. While this plays out it looks to be more range trading within the wider 146.00-151.00 range. CFTC Data shows leveraged funds have bought this dip in USD/JPY betting the support remains intact.

• (Bloomberg) -- “Japan, the European Union, and South Korea are waiting for the US to implement concessions on tariffs, with Japan’s chief trade negotiator Ryosei Akazawa saying “the bleeding hasn’t stopped” for the country’s car industry.”
• "Japan’s CPI may show that inflation eased. But with rice prices still high and wage growth strong, price pressures are building. That puts the Bank of Japan on course to reduce stimulus." - BBG
• "Japan plans to tighten oversight of foreign workers with specialist expertise, after reports some are engaged in work not permitted by their visas, Kyodo said." - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 146.00($385m), 148.40($354m).Upcoming Close Strikes : 146.80($1.19b Aug 21), 150.00($1.06b Aug 21) - BBG.
• CFTC data shows last week asset managers maintained their JPY longs +60866( Last +60532), leveraged funds used the dip to add to their newly built short JPY position -41257(Last -29308).

Fig 1 : JPY CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

AUD: Asia Wrap - AUD/USD Pushes Off 0.6500

The AUD/USD has had a range of 0.6507 - 0.6521 in the Asia- Pac session, it is currently trading around 0.6520, +0.18%. US Equities momentum higher seemed to stall and the USD drifted lower again into the weekend. The AUD continues to consolidate around 0.6500, firmly in the middle of its 0.6350-0.6650 range with no clear direction. Risk has opened trade a little firmer in our session E-minis +0.15%, NQU% +0.25%.

• AU MNI: Productivity Roundtable This Week, Also Survey Data. The federal government’s productivity round table will be held this week from August 19 to 21 with RBA Governor Bullock scheduled to speak on the first day. In the August RBA press conference, she said that she will speak on how increasing productivity growth improves economic resilience. In terms of data, the focus will be on survey releases.
• (AFR - Mark Trevarthen) "Having witnessed at close quarters the changing behaviour of bond markets across four decades now, it has become increasingly clear that Australia has matured into a high-quality destination, and the market is expanding to reflect this, not only through the broader range of corporates coming to the market to issue Australian dollar bonds, but also the wider investor base beyond Australian shores, with offshore participation in primary issuance and the secondary market increasing significantly in the past year."
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6475(AUD541m), 0.6500(AUD424m), 0.6575(AUD395m). Upcoming Close Strikes : 0.6515(AUD744m Aug 19), 0.6600(AUD1.34b Aug 21) - BBG
• CFTC Data shows Asset managers added to their shorts -67449(Last -60729), the Leveraged community though reduced their own shorts -10121(Last -13997).
• AUD/JPY - Asia-Pac range 95.77 - 96.15, Asia is trading around 96.10. The pair found good demand last week towards 95.50, price is now firmly back into the 94.50-97.50 range looking for clearer direction.

Fig 1: AUD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

NZD: Asia Wrap - NZD/USD Bouncing Off 0.5900

The NZD/USD had a range of 0.5921 - 0.5938 in the Asia-Pac session, going into the London open trading around 0.5935, +0.22%. US equities' momentum higher seemed to stall and the USD drifted lower again into the weekend. The NZD/USD found some demand back towards 0.5900 and is bouncing off this support in our session. While still firmly in the 0.5850-0.6150 range it's tough to discern any real direction. Risk has opened a little higher this morning, E-minis +0.15%, NQU5 +0.25%.

• NZ MNI: RBNZ Expected To Cut Rates On Wednesday, Governor Speaks. The highlight of the week will be Wednesday’s RBNZ decision where the MPC is likely to cut rates 25bp to 3% after pausing in July. It will also release updated forecasts and Governor Hawkesby will hold a press conference. On Thursday he will appear before a parliamentary committee to talk about the latest Monetary Policy Statement.
• "Reserve Bank of New Zealand publishes Tara-ā-Umanga Business Expectations Survey, for September quarter. Average 1-year ahead inflation expectation rises to 2.53% from 2.44% in 2q. 2-year rises to 2.64% from 2.54%. 5-year rises to 3.16% from 3.06%. 10-year falls to 3.57% from 3.94%.” -BBG
• "RBNZ BUSINESS SURVEY SHOWS TWO-YEAR INFLATION EXPECTATION 2.64%" - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes :  0.5925(NZD400m Aug 20), 0.5980(NZD660m Aug 21). - BBG
• CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short adding slightly in the NZD -3679(Last -1811), the Leveraged community though reduced their own shorts slightly -4190(Last -6778).
• AUD/NZD range for the session has been 1.0974 - 1.0993, currently trading 1.0985. The Cross is trying to push higher but will need a sustained break above the 1.1000 area. Until then the range looks to be 1.0850-1.1000.

Fig 1: NZD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: China & India Outperform, South Korea Lags

Asian equity markets are mostly on the front foot in the first part of Monday dealings, although there are some pockets of weakness. The lead from US markets on Friday was softer, particularly in the tech space. US futures are up a touch in the first part of Monday dealings, while EU futures are also higher. Market attention remains on US-Ukraine talks later, with focus on whether a peace deal to end the Russia-Ukraine conflict can be reached. The knee-jerk reaction from any peace deal reached is likely to be positive for risk appetite.

• China markets are outperforming. The CSI 300 was last up around 1.5%, putting the index near 4266, which is fresh intra-session highs back to early Oct last year. Hopes of fresh stimulus after disappointing July data is aiding sentiment, while there is also talk of outflows from bonds into equities (the 10yr yield is up 4bps to 1.78%). US President Trump also stated late last week that he will hold off raising China tariffs over their Russian oil purchases.
• Indian markets are also up firmly (+1.5%. For the Nifty, we are back above the 25000 region, last seen in late July. If the better equity tone sees offshore investors return, we could see further gains. This follows a period of underperformance for Indian shares. The proposal by PM Modi to the lower the GST is seen as a positive for consumer sentiment, and more broadly growth, particularly if we can be matched with a more reform orientated government. Another equity market positive is potentially closer India-China ties.
• Japan markets are higher, the Topix +0.60%, the NKY 225 up close to 0.80%. South Korean markets have returned after Friday's break and are off over 1%, putting the Kospi back under 3200. Taiwan stocks are holding up better, despite a Friday slump in the US SOX index.
• Australia's markets is around flat, as we sit near record highs.
• In South East Asia, trends are mixed. Singapore is softer, but Malaysia and the Philippines have ticked higher. Indonesian markets are out today.

OIL: Crude Range Trading Ahead Of Monday’s Ukraine Meeting

Oil prices are slightly higher today after falling over a percent on Friday. WTI is up 0.2% to $62.91/bbl after falling to $62.46 early in the session. Brent is 0.1% higher at around $65.89/bbl after a low of $65.47. Prices fell on the open of trading on what appeared to be some progress towards a Ukraine peace deal with Ukraine’s President Zelenskyy and other European leaders to meet with US President Trump today. The market is also relieved that punitive tariffs on China for buying Russian fuel currently seem off the table. 

• Russia is apparently offering to hold its frontlines in Kherson and Zaporizhzhia in exchange for the Donbas. US special envoy Witkoff said that the US/European security guarantee could “effectively offer Article-5 like language” (NATO), as reported by the BBC.
• Trump wants an agreement with him stating on Truth Social that “Ukraine can end the war with Russia almost immediately”. It is worth noting that Ukraine has to hold a referendum though to agree to official territory changes.
• If Russia walks away from negotiations then US sanctions are likely to be extended including punitive tariffs on those who buy its fuel which could impact supplies and push oil prices higher.
• Later the Fed’s Bowman speaks. In terms of data, euro area June trade and August US NY services & NAHB housing indices print.

GOLD: Bullion Higher, European Leaders Meet Trump Later

After range trading on Friday, gold is 0.5% higher today at $3351.2/oz, close to the intraday high of $3351.81. It appears to have been supported by slightly lower US yields and greenback, and possibly also by some doubt regarding the prospects for a Ukraine peace deal. Russia is demanding the Donbas, not all of which it currently occupies, while Ukraine is not prepared to cede territory, especially if unoccupied. Ukraine’s President Zelenskyy and other European leaders meet with US President Trump today. 

• Silver is up 0.3% to $38.120, close to today’s peak of $38.138. It fell to $37.820 early in trading.
• Equities are generally stronger with the S&P e-mini up 0.1%, Hang Seng +0.6%, Nikkei +0.9% but KOSPI down 1.1%. Oil prices are slightly higher with WTI +0.1% to $62.90/bbl. Copper is up 0.1%.
• Later the Fed’s Bowman speaks. In terms of data, euro area June trade and August US NY services & NAHB housing indices print.

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
18/08/2025	0900/1100	*	EU	Trade Balance
18/08/2025	1215/0815	**	CA	CMHC Housing Starts
18/08/2025	1230/0830	*	CA	International Canadian Transaction in Securities
18/08/2025	1400/1000	**	US	NAHB Home Builder Index
18/08/2025	1430/1530		GB	DMO likely to publish FQ3 consultation agenda
18/08/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
18/08/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
19/08/2025	0800/1000	**	EU	EZ Current Account
19/08/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
19/08/2025	1230/0830	***	CA	CPI
19/08/2025	1230/0830	***	US	Housing Starts
19/08/2025	1230/0830	***	US	Housing Starts
19/08/2025	1255/0855	**	US	Redbook Retail Sales Index