The Japanese yen opened the week slightly higher, together with Nikkei, after prime minister Abe's party won in the upper house election. The ruling Liberal Democratic Party and its coalition took over 133 seats in the 242 seats upper house. The decisive victory would enable Abe to continue his so-called Abenomics in ultra-ease monetary policy, fiscal spending and structural reforms. Abe said on Sunday that the economy was "indeed improving" and pledged to "generate a positive cycle" of job creation, wage increase, person consumption and business investments. It's believed that the result of the election is positive for stocks and negative for yen. However, while yen crosses would likely stay firm in near term, it's believed that the monetary policy was somewhat priced in in the multi month up trend already in the first half of the year already. Yen crosses would likely stuck in range for a few more months before BoJ revisit their policies again in the latter part of the year.
In China, the PBoC removed the floor on borrowing costs, which was set at 70% of the benchmark lending rate, last Friday. It's reported that around 90% of outstanding loans in China was priced at or above the benchmark lending rate, currently at 6%. And virtually none was priced close to the 30% discount. Meanwhile, deposit ceiling was held unchanged at 110% of the benchmark rates. The limit on mortgage rates will also be maintained to curb property market bubbles. The impact of the announcement was so far muted as some believed that reducing the control on deposit rates would be more effective in lowering the costs for lenders, and thus boost lending.
G20 leaders pledged to boost growth to consolidate a "fragile and uneven" recovery. And, the "near-term priority is to boost jobs and growth". Also, they agreed to have policy moves “carefully calibrated and clearly communicated”. IMF managing director Lagarde noted that "it's clearly on the mind of everybody to restore confidence and to create the conditions for growth and for employment."
Latest CFTC data showed speculator net positives were relatively unchanged on July 16 comparing to the prior week. Euro net shorts dropped slightly to -37.2k, from -40.9k. Yen net shorts rose slightly to -85.8k, from -80.4k. Sterling net shorts rose slightly to -37.4k, from -34.3k. Aussie net shorts rose again to -70.7k, hitting another 2013 high. Canadian dollar net short dropped slightly to -20.0k, from -23.8k.
In China, the PBoC removed the floor on borrowing costs, which was set at 70% of the benchmark lending rate, last Friday. It's reported that around 90% of outstanding loans in China was priced at or above the benchmark lending rate, currently at 6%. And virtually none was priced close to the 30% discount. Meanwhile, deposit ceiling was held unchanged at 110% of the benchmark rates. The limit on mortgage rates will also be maintained to curb property market bubbles. The impact of the announcement was so far muted as some believed that reducing the control on deposit rates would be more effective in lowering the costs for lenders, and thus boost lending.
G20 leaders pledged to boost growth to consolidate a "fragile and uneven" recovery. And, the "near-term priority is to boost jobs and growth". Also, they agreed to have policy moves “carefully calibrated and clearly communicated”. IMF managing director Lagarde noted that "it's clearly on the mind of everybody to restore confidence and to create the conditions for growth and for employment."
Latest CFTC data showed speculator net positives were relatively unchanged on July 16 comparing to the prior week. Euro net shorts dropped slightly to -37.2k, from -40.9k. Yen net shorts rose slightly to -85.8k, from -80.4k. Sterling net shorts rose slightly to -37.4k, from -34.3k. Aussie net shorts rose again to -70.7k, hitting another 2013 high. Canadian dollar net short dropped slightly to -20.0k, from -23.8k.