Mixed actions; RBA hikes interest rates

Chinese yuan won’t weaken much beyond level 7, says Capital Economics

The Chinese Yuan is likely to break level 7 against the greenback based on yield spreads in the two countries, according to Julian Evans-Pritchard, senior China economist at Capital Economics. But the currency won’t weaken much beyond that, he told CNBC’s “Squawk Box Asia.”

“They’re clearly stepping up, kind of aiming to defend that threshold,” he said. “I don’t mean it won’t necessarily go through 7 temporarily, but I don’t think it will go much beyond, certainly beyond the 7.2 that we saw in the trade war.”

China is reluctant to allow that to happen, Evans-Pritchard said.

“If it goes above that level then expectations around currency risk become unanchored, you risk seeing capital outflows on a much larger scale. And that’s clearly something they would like to avoid at the moment.” , did he declare.

The Chinese yuan last traded at 6.9498 against the dollar.

—Abigail from

Australia’s central bank hikes rates by half a point

The Reserve Bank of Australia rate hike of 50 basis points, in line with analysts’ forecasts in a Reuters poll.

This is the fifth straight increase since the central bank began raising rates in May.

Inflation in Australia came in at 6.1% in the June quarter, above the target range of 2% to 3%.

—Abigail from

Russia’s energy minister says price cap will lead to more Russian oil being shipped to Asia

A worker walks from the Sans Vitesse housing towards the gas receiving compressor station of the Nord Stream 1 gas pipeline in Lubmin, Germany, Tuesday, August 30, 2022.

Krisztian Bocsi | Bloomberg | Getty Images

Russian Energy Minister Nikolai Shulginov said the country would ship more oil to Asia in response to price caps on its oil exports, Reuters reported.

“Any action to impose a price cap will lead to a deficit in the own markets (of the initiating countries) and will increase price volatility,” he told reporters at the Eastern Economic Forum in Vladivostok, according to Reuters.

Last week, the G-7 economic powers agreed to cap the price of Russian crude to punish Moscow for its unprovoked invasion of Ukraine. Prior to the invasion, Russia exported about half of its crude oil and petroleum product exports to Europe, according to the International Energy Agency.

— Natalie Tam

Real wage growth in Japan will remain negative amid rising inflation: economist

Profit growth in Japan in July from a year earlier fell to 1.8% from 2% in June, new data showed on Tuesday.

This is mainly due to a slowdown in bonuses, Capital Economics Japan economist Darren Tay said in a note.

Incomes are expected to continue to moderate amid tight labor market conditions and a projected 3.3% rise in the minimum wage over the coming months, Tay said.

“With inflation on track to exceed 3% by the end of the year, this means that real wage growth is likely to remain negative over the coming months, but consumers will be able to tap into pandemic savings to finance consumption,” he said.

— Su-Lin Tan

New Zealand inflation may have peaked, but rates need to rise higher: ANZ

New Zealand inflation peaked at 7.3%, reached in the second quarter of the year, partly due to the fall in oil prices from recent highs, ANZ Research said in a note.

“But we also believe that getting inflation back to 2% will be a long journey, requiring the [Reserve Bank of New Zealand to lift the official cash rate] to 4% by the end of the year, and maintain it for several years,” said Finn Robinson and Sharon Zollner, economists at ANZ Research.

The RBNZ raised rates to 3% in August.

Although it has peaked, economists say the risk of it rising is present. For example, if labor costs rise, inflation is unlikely to return to the RBNZ’s target range of 1% to 3% without the cash rate rising above 4%.

“Global inflation risks also abound, with extremely tight labor markets, climate change, geopolitical tensions, energy shortages and trade disruptions all likely to generate a prolonged period of high global inflation in the future. ‘future,’ they said.

“It would also make the job of the RBNZ much more difficult to bring inflation back to target.”

— Su-Lin Tan

The Reserve Bank of Australia is expected to raise rates again for the fifth consecutive time

Goldman Sachs says Australia's central bank could signal further monetary policy tightening

The Reserve Bank of Australia is expected to raise interest rates on Tuesday by an additional 0.5 percentage point on the back of a “fully employed labor market, a massive overshoot in inflation and tight financial conditions.” always very accommodating,” said Goldman Sachs chief economist for Australia. and New Zealand Andrew Boak said.

Boak told CNBC that “Squawk Box Asia” markets do not expect the central bank to soften its stance on controlling inflation when it announces its rate decision at 2:30 p.m. ‘East Australian.

“I think the markets will be particularly sensitive to any kind of signal that the RBA is considering reducing the pace of tightening to, say, increase by 25 basis points,” Boak said.

“I think the key language will be kept around the expectation of further tightening over the next few months. But also the caveat that policy is not on a predefined path.”

There are risks with continued interest rate hikes, such as the “messy unraveling of the housing market,” but Boak says “that’s not our central scenario.”

— Su-Lin Tan

CNBC Pro: Forget volatility. Buy this ETF for a long-term growth story, analyst says

Buy this tech ETF to play a long-term growth story, says portfolio manager

Investors should navigate current market volatility by choosing ETFs with a history of long-term growth, one portfolio manager says.

“The idea of ​​owning an ETF instead of a specific player – you have the whole basket and are riding the wave of more capital investment in cyberspace,” John Petrides, portfolio manager at Tocqueville, told CNBC. Asset Management.

He names his favorite cybersecurity ETF, along with two others.

CNBC Pro subscribers can learn more here.

—Weizhen Tan

Brent futures cut gains after OPEC+ production cut

CNBC Pro: Hold on to money because it beats the market, pros say

Strategists are urging investors to allocate more of their portfolios to cash in these volatile times as interest rate hikes mean it now offers higher yields.

“Cash was king” last month, Bank of America said in a Sept. 1 note, as most asset classes — such as stocks, bonds and even commodities — posted losses.

Here’s how to add it to your portfolios, according to the pros.

CNBC Pro subscribers can learn more here.

—Weizhen Tan

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