Data on Chinese economic activity for August was released today with results across the board. The real economy is showing signs of “green growth”, even as the real estate sector sinks deeper into distress. We got more today with the announcement that state-linked Chinese developer Sino-Ocean had suspended payments on all its offshore debts. Until recently, the company was considered one of the few developers capable of weathering the real estate sector’s debt crisis. Earlier this week, its stock price fell to a record low. This decline has continued today.
AUD/USD ignored problems in China’s real estate sector and instead reacted to better economic data. AUD/USD is near its session high above 0.6460 as I publish. NZD/USD is also higher.
USD/CAD was little changed during the session. USD/JPY, EUR/USD, GBP/USD were also little changed. Gold has seen a rebound and is trading just a few dollars shy of US$1,920.
There was little other notable data or news. The United States Auto Workers Union announced that it would begin a strike at 3 factories in the United States, at GM, Ford and Stellantis (Fiat Chrysler / Groupe PSA). It will start at midnight, unless a last minute deal is made.
The People’s Bank of China today introduced the Medium Term Loan Facility (MLF) to us, at an unchanged rate of 2.5%. 400 billion yuan of MLF matured, 519 billion were injected for a net amount of +119 billion yuan. The PBOC also added funds through 7-day and 14-day reverse repos under open market operations. This is the first 14-day RR in several months, at a rate of 1.95% compared to 2.15% previously.