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The data from New Zealand was very disappointing indeed:

• New Zealand Q2 GDP -0.9% q/q (vs. -0.3% expected)

-0.9% is three times worse than what was expected.

Its prompted forecasts for more interest rate cuts from the Reserve Bank of New Zealand, Westpac tipping 75cp soon:

• Westpac forecasts Reserve Bank of New Zealand rate cuts in October and November

NZD/USD extending down towards 0.5920.

This article was written by Eamonn Sheridan at investinglive.com.

The data from New Zealand was very disappointing indeed:

• New Zealand Q2 GDP -0.9% q/q (vs. -0.3% expected)

-0.9% is three times worse than what was expected.

Its prompted forecasts for more interest rate cuts from the Reserve Bank of New Zealand, Westpac tipping 75cp soon:

• Westpac forecasts Reserve Bank of New Zealand rate cuts in October and November

NZD/USD extending down towards 0.5920.

This article was written by Eamonn Sheridan at investinglive.com.

Westpac now expects the Reserve Bank of New Zealand to step up its easing cycle, forecasting the Official Cash Rate will be lowered to 2.5% at the October meeting and then cut again to 2.25% in November.

• 50bp cut followed by a 25bp cut

The bank said the RBNZ faces mounting pressure to loosen policy more aggressively as growth slows and inflation moderates, leaving scope for back-to-back moves before year-end.

This comes after the terrible data earlier:

• New Zealand Q2 GDP -0.9% q/q (vs. -0.3% expected)

This article was written by Eamonn Sheridan at investinglive.com.

People’s Bank of China USD/CNY reference rate is due around 0115 GMT.

The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.

How the process works:

• Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading.
• The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives.
• Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value.

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Th rate cut from the Fed trims the rate gap between the dollar and the yuan. At the margin this is bearish for USD/CNY. Shorts have built in the dollar, so there is that to contend with.

This article was written by Eamonn Sheridan at investinglive.com.

Japan core machine orders data for July 2025. These data are a leading indicator of capital spending in the coming six to nine months. It’s a volatile data set.

-4.6% m/m

• expected -1.7%, prior 3.0%

+4.9% y/y

• expected +5.4%, prior +7.6%

The y/y headline flattered the data, that m/m is terrible.

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The Bank of Japan statement is due tomorrow, on hold is expected:

• Bank of Japan meeting begins today, rates expected to kept on hold – Nikkei report

This article was written by Eamonn Sheridan at investinglive.com.

The Hong Kong Monetary Authority (HKMA) adjusts its interest rates in line with the U.S. Federal Reserve’s decisions primarily because of the linked exchange rate system between the Hong Kong Dollar (HKD) and the United States Dollar (USD).

Established in 1983, this system pegs the HKD to the USD within a narrow band, currently at a rate of about 7.8 HKD to 1 USD, with allowable fluctuations within a tight range.

To keep the currency peg stable, the HKMA must adjust its interest rates to be in line with those of the USD. If the interest rates in Hong Kong were significantly higher than those in the U.S., it would attract a flow of USD into Hong Kong, increasing the demand for HKD and potentially pushing the exchange rate outside its designated band. Conversely, if Hong Kong’s rates were much lower, it would encourage outflows of HKD in exchange for USD, again risking the stability of the peg.

You’ll note the HKMA benchmark rate is above the Fed’s. The HKMA shadows the Fed to maintain the peg but keeps its base rate about 50 basis points higher as a built-in buffer. This ensures investors don’t always prefer USD over HKD, supporting currency stability.

This article was written by Eamonn Sheridan at investinglive.com.

The IPO market is experiencing a revival after a yearslong drought, with notable debuts from CoreWeave, Circle and Figma.

The Bank of England is expected to slow the pace of its quantitative tightening programme at Thursday’s meeting, while leaving interest rates unchanged at 4%.

• Policymakers are likely to vote 7–2 in favour of holding steady, after last month’s narrow 5–4 decision to cut rates.

Markets anticipate the BoE will reduce the annual pace of gilt sales from £100 billion to around £67.5 billion, according to a Reuters poll, with some analysts predicting an even deeper slowdown to £60 billion or a shift toward shorter-dated bonds.

• While the BoE insists QT has only marginally lifted borrowing costs, critics argue it has exacerbated volatility and contributed to the sharp rise in long-dated gilt yields this month.

The UK faces the highest inflation and government borrowing costs in the G7, with price growth holding at 3.8% in August — nearly double the BoE’s 2% target. The central bank expects inflation to peak at 4% before easing gradually back to target by mid-2027. Governor Andrew Bailey has warned there is “considerably more doubt” about how quickly rates can be cut further.

Futures markets now price only a 30% chance of another cut this year, though economists in a Reuters poll still see scope for reductions in November or December and again in early 2026.

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Gilt yields may ease if QT slowdown is larger than expected, but inflation risks linger

• Sterling could firm if policymakers strike a hawkish tone despite holding rates steady

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The Bank of England announcement is due at 1100 GMT, 0700 US Eastern time.

This article was written by Eamonn Sheridan at investinglive.com.

China’s auto sector is in turmoil as years of state-driven overproduction have created a glut of vehicles, forcing steep discounts, gray-market sales, and unprofitable dealers. Analysts warn only a handful of automakers will survive long term, but Beijing has resisted allowing failures due to economic and political risks, leaving the world’s largest car market trapped in a cycle of oversupply.

Reuters carried an extended report on this. In summary:

China’s auto industry is grappling with severe overcapacity after years of government policies that pushed production targets over market demand. Carmakers and dealers now face a glut of vehicles that has triggered steep discounts, unusual sales tactics, and widespread losses across the supply chain.

Dealers slash prices to qualify for factory rebates, while unsold cars are registered and insured as “sold,” exported as zero-mileage “used” vehicles, or dumped onto gray-market platforms like Zcar. Some vehicles even end up abandoned in car graveyards or auctioned online at a fraction of their original price. Analysts say the system has become a vicious cycle of oversupply and destructive competition.

Local governments have exacerbated the problem by offering cheap land and subsidies to attract factories, creating excess capacity nationwide. While giants like BYD and Geely may weather the storm, most of China’s 129 EV and hybrid brands are unlikely to survive, with consultants predicting only 15 will be viable by 2030. Despite calls for consolidation, Beijing has been reluctant to let automakers fail, fearing mass layoffs and slower growth.

The crisis has wider implications: autos and related industries make up about a tenth of China’s GDP, and foreign automakers are rapidly losing market share. Meanwhile, Europe and the U.S. are wary of a flood of cheap Chinese cars disrupting their markets. With EV price wars now entering a third year, the industry faces a shakeout, but political incentives and economic risks may delay tough reforms.

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Australia has no local car manufacturers, so nothing to protect. Getting some of these into the coutnry would be an big impact on inflation (lower).

This article was written by Eamonn Sheridan at investinglive.com.

CNBC’s Jim Cramer suggested major market themes haven’t really changed in the wake of the Fed’s meeting.