MARKET UPDATE
Asia FX muted as dollar firms, Chinese yuan sinks to 5-month low
Most Asian currencies moved little on Thursday and the dollar scaled seven-week peaks on optimism on raising the U.S. debt limit and in anticipation of more cues on policy.
The Chinese yuan was a key outlier, hitting its lowest level in over five months amid growing concerns over a slowing economic recovery in the country.
The yuan fell 0.1%, crossing the psychologically important 7 level against the dollar for the first time since early-December. A breach of the 7 level, which is closely watched by the government and traders, usually heralds more losses in the Chinese currency.
A string of weaker-than-expected economic readings for April pointed to a slowing recovery in the country, despite the lifting of anti-COVID measures earlier in the year. Markets also began speculating that the People’s Bank of China may further cut interest rates to support the economy, which bodes poorly for the yuan.
The offshore yuan, which had breached the 7 level earlier this week, fell 0.3%.
Broader Asian currencies moved in a flat-to-low range, coming under pressure from a stronger dollar as the Biden Administration said a deal on raising the debt limit could be struck as soon as this week.
European stock futures largely flat; Lagarde, U.S. debt ceiling in focus
European stock markets are expected to open largely unchanged Thursday, as investors await further news on the potential for a deal to lift the U.S. debt ceiling deal as well as comments from ECB chief Christine Lagarde.
Investors have been buoyed by the apparent determination of President Joe Biden and top U.S. congressional Republican Kevin McCarthy to reach an agreement soon, with Biden cutting short an Asia trip to return to talks on Sunday.
The drama has been unfolding for weeks, since the government officially hit the ceiling of $31.4 trillion in January, with the Treasury warning that it could run out of cash by early June, potentially triggering a disastrous, first-ever default.
Back in Europe, the region’s data cupboard is largely bare today, and instead a lot of the day’s focus will be on a speech by ECB President Christine Lagarde.
The European Central Bank raised interest rates earlier this month, continuing its prolonged monetary tightening campaign against inflation, and investors will be looking for clues of future action.
Amazon’s cloud unit to invest $13 billion in India by 2030
Amazon Web Services (AWS), the cloud computing division of Amazon.com Inc (NASDAQ:AMZN), said on Thursday it plans to invest 1.06 trillion rupees ($13 billion) in India by 2030, doubling down on its past investments to cater to an ever-growing demand.
The latest investment will be used to build its cloud infrastructure in India, and it will support over 100,000 full-time jobs annually, AWS said.
The company runs two data centres in the Indian subcontinent – one in Mumbai which was launched in 2016, and another in Hyderabad, which started in 2022.
AWS’ total planned investment in India adds up to about $16.4 billion by 2030, the company said in a statement.
The cloud platform offers more than 200 services, including storage, robotics and artificial intelligence.
The proposed investment comes as India steps up efforts to attract more big-ticket investments.
U.S. networking equipment maker Cisco Systems (NASDAQ:CSCO) earlier this month said it would start manufacturing from India to diversify its global supply chain, while Apple Inc (NASDAQ:AAPL) supplier Foxconn will invest $500 million to set up plants in the southern Indian state of Telangana.
Separately, India’s government has been nudging foreign tech companies to store more of their data locally, a move seen as New Delhi’s attempt to gain stricter oversight of Big Tech firms. The country is currently in the process of drafting a cloud and data center policy to oversee the sector.
A host of global companies, including Microsoft Corp (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) Inc’s Google are ramping up cloud investments in India, betting on the rising digital consumption in one of the fastest-growing markets.
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