INDIA: US Trade Deficit With India Has Widened Over Last 5 Years
Sep-10 2025 02:08
The FT reported that President Trump told European representatives that he’s prepared to impose the same tariffs as Europe on China and India for buying Russian energy. However, Trump also said he had spoken with his “good friend” Indian PM Modi and that trade negotiations were ongoing between them and that he expects “a successful conclusion for both”.
- On August 27 US import duties of 50% came into effect on Indian products. 25% was the reciprocal tariff, down only 1pp from the initial rate proposed, and another 25% was punitive for India’s significant imports of Russian oil which it has refused to stop purchasing. The US’s main export to India is oil and gas.
- India’s 2024 trade deficit with the US had almost doubled since 2020 but 2025 is on track to see it grow sharply but India has frontloaded shipments since March to beat duties and they could ease off over H2.
US trade deficit $bn 12mth sum
Source: MNI - Market News/LSEG
- India has one of the higher export shares to US in the region at 20% in 2024 but as a share of its economy it is low at only 2.6% of GDP.
- The main sectors impacted by higher US import duties are pharmaceuticals followed by miscellaneous manufacturing commodities, communications equipment, apparel and textile furnishings.
- India is only the 10th largest source of US merchandise imports worth 2.7% of the total and in terms of Asian countries it is behind Taiwan and South Korea who are facing US tariffs of 20% and 15% respectively. 5.2% of US pharmaceutical imports come from India, the 5th largest.
US imports of pharmaceuticals & medicines % total 2024
Source: MNI - Market News/International Trade Administration
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AUSSIE BONDS: Subdued Data light Session With Cash US Tsys Out
Aug-11 2025 01:33
ACGBs (YM -0.5 & XM -0.5) are slightly weaker on a local data-light day with cash US tsys out due to a Japan holiday.
- The focus of the week will be on tomorrow's RBA decision. A 25bp cut to 3.6%is widely expected. The RBA announcement at 1430 AEST will include how the Monetary Board voted and an update of staff projections. Governor Bullock will hold her usual press conference at 1530 AEST.
- There are also a number of key data releases too. Q2 wages print on Wednesday and July jobs data Thursday. Q2 wages on Wednesday and are forecast to moderate slightly rising 0.8% q/q & 3.3% y/y after Q1's 0.9% q/q & 3.4% y/y. July labour market data print on Thursday and will be watched closely for signs of further deterioration.
- Cash ACGBs are 1bp cheaper with the AU-US 10-year yield differential at -3bps.
- The bills strip is flat to -1 across contracts.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut tomorrow is given a 97% probability, with a cumulative 62bps of easing priced by year-end.
- This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$1000mn of the 2.75% 2 1 November 2029 bond on Friday.
FOREX: JPY Crosses - Bounce With Risk, Approaching Key Resistance
Aug-11 2025 01:30
US Equities were bid for the majority of the N/Y session, closing within a whisker of all-time highs. This morning US futures are trading slightly higher, ESU5 +0.17%, NQU5 +0.11%. The JPY crosses are extending their recent gains, though they are now approaching some pivotal resistance.
- EUR/JPY - Friday night range 171.49 - 172.34, Asia is trading around 172.05. This pair bounced off its support just below 170.00 and has bounced nicely to put a base in now around 170.00. While risk continues to trade positive this will remain well bid now on dips.
- GBP/JPY - Overnight 197.70 - 198.82, Asia trades around 198.55. The pair found good demand towards the 195.00 support as risk turned higher. Depending on your view for risk from here, I suspect this bounce back towards 198.50 could see sellers remerge first up. A move back above 200.00 would signal another leg higher though.
- NZD/JPY - Overnight range 87.77 - 88.13, Asia is currently dealing 87.85. The pair found solid demand towards the 86.50 area, sellers should remerge a bounce back towards 88.00/88.50 first up. A sustained move back above 89.00 would reinstate the momentum higher.
- CNH/JPY - Overnight range 20.4828 - 20.5711, Asia is currently trading around 20.5400. This pair had an ugly rejection just below the 21.00 area and is back probing its first support area. Good demand has continued to be seen around this 20.40 area initially, a sustained break back below 2.3000 is needed to turn momentum lower again.
Fig 1 : GBP/JPY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA: Central Bank Withdraws CNY432.8bn via OMO
Aug-11 2025 01:23
- The PBOC issued CNY112 bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY544.8bn.
- Net liquidity withdrawal CNY432.8bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.42%.
- The China overnight interbank repo rate is at 1.30%, from the prior close of 1.29%.
- The China 7-day interbank repo rate is at 1.41%, from the prior close of 1.45%.
