By Geoffrey Smith
Investing.com — The yen slumps to a new 24-year low against the dollar as China’s trade figures cast doubt on Asia’s economic outlook. The Federal Reserve releases its Beige Book survey as the Bank of England prepares to fight for its independence from the new UK Prime Minister, Liz Truss. Apple unveils its new 5G-enabled iPhone and Vladimir Putin blasts the US Here’s what you need to know in the financial markets on Wednesday, September 7.
1. The incredible shrinking yen
The Japanese slump deepened after Tokyo warned of “rapid and one-sided” currency moves, doing nothing to stop them.
It rose to a new 24-year high of 144.38 after China’s monthly index showed a sharp slowdown in both growth and growth, suggesting that the slowdown in global demand for Chinese-made goods is brewing. reflecting on Chinese demand for Japan’s capital goods.
The dollar is now up more than 31% against the yen in the past 12 months, and the pace of this week’s decline has prompted talk of Bank of Japan intervention, possibly in concert with other central banks. However, Reuters quoted former Japanese diplomat Hiroshi Watanabe as saying that Japan should not intervene or change monetary policy in response as it would be ineffective in stemming the dollar’s advance.
2. Central banks on alert again
It’s a big day for central banks around the world again, with both expected to raise interest rates again. Poland’s rate hike cycle appears to be coming to an end, with the NBP expected to rise just 25 basis points this time after a series of larger hikes in recent months.
However, analysts are expecting a whopping 75 basis point hike by the Bank of Canada, in what would be an echo of the latest move and possibly a preview of tomorrow’s action in the .
The Fed itself publishes its survey, while the MBA publishes weekly figures on mortgages and . There will be speeches early from the Fed and (only Mester has a vote on the FOMC this year), and later from the Vice President.
Meanwhile, in the UK, Bank of England Governor Andrew Bailey is set to meet with new Treasury chief Kwasi Kwarteng to discuss, among other things, the BoE’s plans to start selling Gilts back into the market. , as is the new government of Prime Minister Liz. Truss appears ready to embark on a huge increase in government borrowing to finance her power package.
3. Stocks poised to open higher
US stock markets will open with a modest rebound after falling to fresh two-month lows on Tuesday on concerns about the global economic slowdown and its impact on earnings.
At 06:30 ET (10:30 GMT), they were up 50 points, or 0.2%, while and were online.
Apple (NASDAQ:) is likely to dominate the session, unveiling the new iPhone 14, despite expectations of only modest incremental changes to its design and capabilities. Overnight, Spanish oil and gas company Repsol (BME:) said it will sell 25% of its upstream business to energy and infrastructure experts EIG, with a view to listing the business in New York within a few four years.
4. Europe contemplates caps on energy prices
The European Commission is set to propose capping the wholesale price of electricity for most types of generation in an effort to prevent the collapse of Europe’s industry over the winter.
The Financial Times reported that the Commission will propose capping the price of power generated from sources other than gas at 200 euros per megawatt-hour when EU energy ministers meet on Friday. The current spot price for German electricity in Germany, the regional benchmark, is above €450/MWh, while French prices hit €1,000 last week.
Wholesale electricity prices have skyrocketed because gas is often the energy source for marginal power production, which dictates wholesale prices. Gas prices are approximately 10 times the level prevailing in the last 10 years.
5. Oil prices rise as Putin criticizes
Crude oil prices continued to trade near seven-month lows as the latest trade data from China failed to reassure the global demand outlook.
Fierce warnings from Russian President Vladimir Putin that he would withdraw all forms of Russian energy from “enemy” countries only managed to push prices up by about half a percent, leaving futures at $87.42 a barrel and $ 93.44 per barrel.
“We will not provide anything at all if it is contrary to our interests, in this case economic [interests]Putin said at a conference in Russia’s Far East. “No gas, no oil, no coal, no fuel oil, nothing.”
The US supply-demand balance will be updated at 16:30 ET, one day later than usual due to the Labor Day holiday, which usually marks the end of peak US summer demand. USA