HKD: USD/HKD Spot Lower Following Further HKMA Intervention
Headlines have crossed of further HKMA intervention to protect the top end of the USD/HKD peg band at 7.8500. Bloomberg notes HKD purchases rose to $29.634bn HKD for the session. There were headlines from earlier in the overnight session of intervention. The projection for the aggregate balance is to be at around $114.5bn HKD by Monday. Recent highs in the aggregate balance were at 174.1bn HKD.
- This is the third round of intervention for USD/HKD, the first bout was 9.42bn HKD in late June, then just over 20bn HKD in earlier July.
- Again the focus will be on what impact this has on the Hibor rate fixings, with limited impact so far on reduced liquidity via the lower aggregate balance. The 1 week Hibor rate was set at 0.1975% yesterday, only a touch above recent lows.
- Spot USD/HKD is away from the top end of the band, last at 7.8460/65, which is just under recent lows from late June (when the first round of intervention took place). This is around the 20-day EMA support point as well.
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NEW ZEALAND: Milk Price Auction Sees Second Consecutive Drop
Overnight, the fortnightly whole milk powder auction saw prices fall a further 3.7% versus the prior result. From $4332, we are now back at $4173. This is the second consecutive decline for the auction result, but by recent standards we are still elevated from an historical standpoint. The chart blow plots the auction whole milk price against the Citi terms of trade index for NZD.
- BBG noted: "The GDT price index change, which is a weighted average of the percentage changes in individual milk products between trading events, was a decrease of 1.6%"
- Yesterday we had the Q1 terms of trade print, which were positive in q/q terms but sub market expectations. Higher dairy prices aided the goods terms of trade backdrop.
Fig 1: Whole Milk Auction Price & Citi Terms Of Trade For NZD
ASIA: Coming Up In Asia Pac Markets On Wednesday
| 0000BST | 0700HKT | 0900AEST | Australia May F S&P PMI Services |
| 0000BST | 0700HKT | 0900AEST | South Korea May CPI |
| 0130BST | 0830HKT | 1030AEST | Japan May F Jibun Bank Services PMI |
| 0230BST | 0930HKT | 1130AEST | Australia Q1 GDP |
| 0230BST | 0930HKT | 1130AEST | Australia Q1 Company Profits |
US DATA: Light Vehicle Sales Pull Back Sharply In May, Likely Weighing On Retail
US light vehicle sales (cars and light trucks) fell more sharply than expected in May, to 15.65M (16.00M expected, 17.27M prior), per Wards Automotive Group data.
- This follows a 4-year-high 17.77M in March, with April's representing the 2nd-highest monthly sales since 2021.
- Both prior months - and the dropoff - are very likely related to tariff front-running and the subsequent reversal of that effect.
- Note that autos are the single largest category of Census Bureau retail sales, and this report suggests that a significant pullback in the latter is likely in the May report (out Jun 17), after two record nominal highs in March and April in the category.
- Note that vehicles are not part of the Census Bureau's Control Group measure.
