An orderly start to the week

The weekend was relatively quiet on the news front, with no notable market-moving headlines. However, it did contain its usual substantial quota of human misery headlines, which clearly sell more newspapers. Most notable was the indefinite postponement of the US/China trade agreement review, to give China more time to buy more goodies from the Americans. In contrast to most US/China rhetoric these days, the tone from both sides was refreshingly polite and civilised.

China’s PBOC announced a 1-year CNY 700 bio medium-term lending facility (MLF) this morning. The amount was higher than expected, with CNY 550 bio maturing this month. More importantly, the rate was unchanged at 2.95%, implying that there will be no cuts to China’s one and five-year loan prime rates on Thursday. The PBOC seems determined to avoid inflating bubbles in the economy but resisting the urge to follow the rest of the world and flood the financial system with liquidity. In the longer-term, that may be a wise policy move, especially with the economy on a recovery trajectory. The higher MLF total should be positive for Chinese financial stocks today.

Japanese economy tanks in Q2

Japan released its expectedly nightmarish GDP data this morning. Preliminary Annualised GDP for Q2 fell by 27.8%, slightly worse than expected. The Preliminary Q2 QoQ data also came in slightly worse at -7.80%. The GDP data has not shifted financial markets, mostly because it was a known known, and because April to June seems like distant history in the context of 2020. The period itself covering huge Covid-19 lockdowns across the world, affecting Japan’s export performance.

The rest of the data calendar across the world today, although extensive, is strictly 2nd and 3rd tier and unlikely to impact financial markets. Financial markets finished quietly on Friday, with currency, equity, energy and precious metals markets all content end the week aimlessly range trading.

That is much the same theme in Asia after a quiet news weekend. Financial markets are content to mark time, awaiting more heavyweight inputs. Intra-day volatility is likely to be driven localised news headlines.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes.

He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays.

A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others.

He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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