Ranges (Up till 11.

45am HKT)
Currency

Currency

EURUSD

1.0847-94

EURJPY

135.03-46

USDJPY

124.27-48

EURGBP

0.69815-980

GBPUSD

1.5526-74

USDSGD

1.3811-72

USDCHF
AUDUSD

0.9775-91
0.7354-83

USDTHB
USDKRW

35.08-15
1167.6-1175.1

NZDUSD

0.6519-50

USDTWD

31.635-765

USDCAD

1.3186-1.3213

USDCNH

6.2191-6.2277

AUDNZD

1.1266-1.1301

XAU

1084.7-1087.1

Key Headlines
Story about this IMF recommending expanding the
SDR basket dominated our session. China Experts and
bloggers seemed to have misread the recommendation
by the IMF official; delaying inclusion to Sept 2016.
Basically, there are number of issues to be resolved
before putting RMB into SDR basket and we dont need a
rocket scientist to point that out. The IMF Executive
Board decision expected in Nov on composition of SDR
basket will still take place.
The only two things growing in Greece is the debt and
the size of the third bailout program. British think-tank
NIESR sees bigger Greek haircut as much as 55%. One
article in The Telegraph said the drastic fall in Greek
bank shares meant that recapitalising the Greek banks is
now going to be significantly more expensive; that the
third Greek bail-out might exceed 100bn.
UsdCad printed new high 1.3213, took out small barrier
at 1.3210. Euro also took out barrier at 1.0850, got to low
1.0847. AudNzd ran into offers 1.1300. UsdMyr new
high; 1s NDF 3.9060.

FX Flows
You just have to respect the Japanese. They control
UsdJpy and there is no question about it. Early Tokyo
names kept offering UsdJpy from high 124-thirties and
suppressed the Usd to 124.27 despite some light demand
into fix from Japanese corporate for Goto-bi Day. Right
after the fix, corporate buying surfaced took UsdJpy up
and soaked up the offers at 124.40. Decent sell orders are
reported at 124.50-60 while buyers lurk 124.10. Shortterm accounts left stops at 124.00 and renewed buying at
123.60-75.

bigger Greek haircut as much as 55%. One article in

The Telegraph said the drastic fall in Greek bank shares
meant that recapitalising the Greek banks is now going
to be significantly more expensive; that the third Greek
bail-out might exceed 100bn. It took few hours for
market to take out the bids and triggered stops all the
way to 1.0865. We also triggered small barrier at 1.0850.
However, price action does indicate fairly good demand
as well. Feels like there are option related bids scattered
from 1.0880 down to 1.0800. There is a 1.0800-option
strike exp tomorrow NY cut of decent notional.
Euro offers are found at 1.0900-10 and stop buy orders
from intraday accounts thereafter.
One US name seen selling UsdCad post NY close from
1.3193 to 86 but demand was strong. We had various
names paying our offers up to 1.3211. Took out a small
barrier at 1.3210. Once that was done and dusted,
UsdCad fell back to 1.3191. Yes, liquidity was not the
best. Offers are light and thickens towards 1.3300. Most
bids are under 1.3150. Next few days, there are a lot of
UsdCad options expiries, average to decent size from
1.2850 to 1.3000, insignificant between 1.3100-1.3300.

Asians
The story on RMB/SDR dominated the Asian session
and seems that some have misread the recommendation
by the IMF official. Most bloggers read it as IMF is
delaying decision on RMB inclusion into SDR and this is
a disappointment to the Chinese. Sadly, this is wrong.
Siddharth Tiwari, director of the IMF's strategy, policy
and review department said the proposed extension,
which will be decided by the Executive Board later this
month, would not in any way prejudge the timing of
conclusion or outcome of the review. That is the board
decision still expected in Nov. Furthermore the delay is
recommended so as not to disrupt financial market
trading on the first day of 2016.
China Caixin PMI somewhat in line with numbers out
over the weekend. Composite was slightly weaker but
services saw a jump.
Usd/Asia began the morning bid but towards late
morning, started to pare off gains on profit taking.

The New Zealand dollar fell on the weak labour report.

NzdUsd was trading in the 0.65-forties and dipped to
0.6526. Late comers seen jumping into AudNzd and
found better sellers towards 1.1300.

UsdMyr reached new highs, 1s NDF got to 3.9060. Not a

word on agent banks but we know they are out there.
Malaysia trade data out today at 12.00pm local but the
real focus is Fridays foreign reserves data, previously at
$100.5bn.

I was told EurUsd stops below 1.0880 when I walked in

and a Swiss name sat on the bid, unwilling to let this go.
Stories in UK press that British think-tank NIESR sees

Both USDCNH and USDCNY are jumpy this morning

and some traders linked it to IMF report. A rumour that
agent banks are capping USDCNY at 6.2110. USDCNH

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

was bought up to 6.2277 then scaled back following the

agent banks in onshore market.
We saw some speculators putting on CNH spreads
selling the 6-months CNH points and buying 1-year,
betting on blowout.

Who said what

IMF: Must resolve number of issues before RMB in
SDR basket
IMF: Staff recommendation to move 5 FX in SDR
basket
IMF: Significant work remains before board decision
on RMB/SDR
IMF: Staff recommends extend current SDR to Sept
2016
IMF: Extension doesnt give China extra time to
comply
IMF: Extension is independent of board decision
IMF: Board decision on RMB in SDR still expected in
Nov
IMF: Expects board decision on SDR basket extension
in Aug
IMF: By year end, will look at other measures of RMB
usage
IMF: Significant degree of RMB international use, still
behind the top 4
IMF: Onshore/offshore divergences raises operational
issues
Sec Journal: China may continue to stimulate property
market in H2
Sec Journal: Property prices in many Chinese cities to
rebound

News & Data

New Zealand Q2 Unemployment Rate rose to 5.9%
from 5.8%
New Zealand Q2 Participation Rate lowered to 69.3%
from 69.6%
New Zealand Q2 Employment Change Q/Q at 0.3%
from 0.7%
New Zealand Q2 Employment Change Y/Y at 3% from
3.2%
UK July BRC Shop Price Index Y/Y weakened to -1.4%
from -1.3%
Australia July AiG Performance of Services Index at
54.1 from 51.2
Japan July Nikkei PMI Composite unchanged 51.5
Japan July Nikkei PMI Services 51.2 from 51.8
China July Caixin PMI Composite 50.2 from 50.6
China July Caixin PMI Services 53.8 from 51.8
Telegraph: Greece needs 100bn debt relief as
permanent depression looms
Greece needs a debt write-down of almost 100bn if the
country is to stand a chance of clawing its way out of a

prolonged and severe depression, according to a

leading think-tank. In a stark analysis, the National
Institute of Economic and Social Research (NIESR) laid
bare the impact of VAT hikes and strict budget targets
that it said could become self-defeating. As Greek bank
shares saw a third of their value wiped-off for a second
day, NIESRs analysis showed Greeces economy will
slump back into recession this year and next.
http://www.telegraph.co.uk/finance/economics/117829
65/Greece-needs-100bn-debt-relief-as-perpetualdepression-looms.html
The Guardian: NIESR warns on further Greek
austerity
NIESR said Greeces economy will suffer fresh damage
from the austerity measures demanded by its creditors
and will remain stuck in permanent depression unless it
receives substantial debt relief. NIESR report said that
an even bigger cut of 55% was needed to give Greece a
chance of reducing its debt to 120% of GDP by 2020. It
warned that continuing to insist on unrealistic fiscal
targets will ensure that the Greek economy will remain
in depression.
http://www.theguardian.com/business/2015/aug/05/ni
esr-warns-on-further-greek-austerity?CMP=twt_gu
Reuters News: IMF review recommends delaying
currency basket adoption of yuan
The International Monetary Fund should put off any
move to add the yuan to its Special Drawing Rights
currency basket until September 2016, an IMF staff
report said, a move that would effectively end the
Chinese currency's chances of an early inclusion. The
report, published on Tuesday, comes after Beijing
launched a major diplomatic push for the yuan's
inclusion in the IMF basket as part of its long-term
strategic goal of reducing dependence on the dollar. The
report said the implementation of any formal decision to
add the yuan to a basket of currencies comprising
dollars, euros, pounds and yen should be delayed so as
not to disrupt financial market trading on the first day of
2016.
http://www.reuters.com/article/2015/08/04/us-imfcurrency-china-idUSKCN0Q929G20150804
WSJ: China Clamps Down on Short Selling
China took another step to curb volatility in its stock
markets late Monday, moving to clamp down on short
selling in the country. Under new rules, short sellers
must wait at least one day to cover their positions and
pay back loans used to buy shares. Previously, investors
could cover their positions within the same day, a
practice Chinas stock exchanges said tends to add to
abnormal volatility of stock prices and affect market
stability.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

http://www.wsj.com/articles/china-clamps-down-onshort-selling-1438664957?mod=wsj_nview_latest
WSJ: Australian Court Revokes Approval for
$12.2 Billion Adani Group Coal Mine
Indias Adani Group has had approval from Australias
government to build one of the worlds largest coal
mines, previously estimated to cost 16.5 billion
Australian dollars, revoked by a federal court. Adani said
the decision was the result of a technical legal error
related to documents on the conservation of two
vulnerable species, the yakka skink and ornamental
snake, that it said werent presented by the environment
department when completing its approval for the mineand-rail project in central Queensland state, which was
handed down a year ago.
http://www.wsj.com/articles/australian-court-revokesapproval-for-adani-groups-12-2-billion-coal-mine1438741179?mod=wsj_nview_latest
WSJ: Shire Makes Unsolicited $30.6 Billion Bid
for Baxalta
Dublin-based Shire PLC said Tuesday that it has made
an unsolicited offer to acquire rare-disease treatment
maker Baxalta Inc. for roughly $30.6 billion in stock, in
the latest sign of drug makers strong appetite for deals.
Baxalta, based in Deerfield, Ill., rejected the proposal,
saying it undervalued the company. Baxalta, which sells
drugs for rare bleeding disorders and immune
deficiencies, is just five weeks old as a public company
after spinning off last month from Baxter International
Inc., which remains its largest shareholder.
http://www.wsj.com/articles/shire-offers-to-buybaxalta-for-30-billion-1438688992
Ambrose Evans-Pritchard in Telegraph: Day of
reckoning postponed as global recovery builds
With hindsight it is clear that the world economy came
within a whisker of recession earlier this year. Global
shipping volumes contracted by 3.4pc between January
and May, according to Hollands CPB world trade index.
This episode is now behind us. Leading indicators and
monetary data in the US, Europe and China point to an
accelerating rebound over coming months.
http://www.telegraph.co.uk/finance/economics/117825
68/Day-of-reckoning-postponed-as-global-recoverybuilds.html
Telegraph: Cost of a third Greek bail-out is likely
to be too high for Europe
There is also relatively little chance of Greece being able
to demonstrate the necessary additional commitment to
carry on with reforms, given that its government is badly
split, there are likely to be new elections. Since the IMF
is now de facto out, that means the eurozone states will
have to find an extra 8bn to 15bn on top of what they

would have been anticipating at the time of the mid-July

agreement. The Athens stock exchange re-opened on
Monday. Greek bank stocks tanked, dropping by, or
close to, the maximum permitted amount of 30pc on
each of the first two days. Recapitalising the Greek banks
is now going to be significantly more expensive than
previously anticipated. It is not out of the question now
that the final figure for a third Greek bail-out might
exceed 100bn and that that will all be borne by the
eurozone states, with no participation by the IMF.
http://www.telegraph.co.uk/finance/economics/117834
82/Cost-of-a-third-Greek-bail-out-is-likely-to-be-toohigh-for-Europe.html
Nikkei: Excessive austerity threatens growth,
Renzi warns
Too great an emphasis on public spending cuts and other
budget-balancing measures could hurt euro nations'
economic prospects, Italian Prime Minister Matteo
Renzi told The Nikkei on Tuesday. "The eurozone
countries need to abide by fiscal discipline," Renzi said
in an interview during a visit to Japan. "But urging them
to pursue excessively harsh fiscal austerity could result
in a loss of momentum toward self-sustained" growth, he
said.
http://asia.nikkei.com/Politics-Economy/PolicyPolitics/Excessive-austerity-threatens-growth-Renziwarns
Reuters Exclusive: Boeing loses large satellite
deal due to trade credit woes - sources
Boeing Co is scrambling to find alternate financing for a
satellite contract worth "several hundred million dollars"
that was scuttled by privately held commercial satellite
provider ABS due to uncertainty about the future of the
U.S. Export-Import Bank, three sources familiar with the
matter said on Tuesday. ABS, based in Bermuda and
Hong Kong, terminated its order for the satellite in midJuly, citing the expiration of the trade bank's charter on
June 30, according to the sources, who asked not to be
named given the sensitivity of the issue.
http://www.reuters.com/article/2015/08/04/usboeing-exim-satellite-idUSKCN0Q92EL20150804?
feedType=RSS&feedName=businessNews
Kathimerini: Early polls and congress on the
agenda for SYRIZA
SYRIZAs political secretariat met on Tuesday to begin
preparations for an emergency party congress next
month at which the differences within the party over the
prospective third bailout are due to be settled. Members
of the party body decided to begin naming the members
of two committees this week that will draw up the
agenda for the September congress. Their meeting came
as former Energy Minister Panayiotis Lafazanis, who
leads SYRIZAs radical Left Platform, renewed his attack

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

on the new agreement being lined up by the government

and its creditors.
http://www.ekathimerini.com/200254/article/ekathime
rini/news/early-polls-and-congress-on-the-agenda-forsyriza
WSJ: Greeces Ills Require a Banking Fix
The crash in the Greek stock market when it reopened
Aug. 3 reminds us that Greeces economy and financial
system are still in awful shape. Greek bankswhose
stocks have been pummeled this weekreopened on
July 20 with the help of the European Central Bank. But
many restrictions, including those on cash withdrawals
and international money transfers, remain. Greece
suffered a run on its banks, closing them on June 29.
Payments froze and the economy was paralyzed. Greeces
banking crisis revealed the main structural problem of
the eurozone: A currency union must isolate banks from
sovereign debt.
http://www.wsj.com/articles/greeces-ills-require-abanking-fix-1438730566?mod=wsj_nview_latest

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.