Morning brief: Yuan soars to strongest since Nov; Australian CPI jumps to 2.8%

A day of dramatic economic recalibration is unfolding across the Asia-Pacific, as a surprise inflation shock in Australia dashes rate-cut hopes, the Chinese yuan surges to a ten-month high, and a top investment bank forecasts a looming crash in oil prices.

This flurry of activity comes as South Korea looks to capitalize on a successful diplomatic mission to Washington, setting the stage for a period of significant market volatility.

Here’s your one-stop stand to catch up on all the headlines you may have missed.

South Korea tests the waters with a dollar bond sale

Buoyed by the success of President Lee Jae Myung’s recent summit with Donald Trump, South Korea is now preparing to test the waters of global investor sentiment.

The government is considering a sale of dollar-denominated bonds and has sent out a request for proposals to major banks for a potential issuance of up to about 1.8 billion dollars in the coming months.

The move, following a successful charm offensive in Washington that helped defuse trade tensions, is a clear signal that Seoul is eager to capitalize on the renewed goodwill and record-low credit spreads in the international debt markets.

The dragon’s ascent: Yuan hits 10-month high

The Chinese yuan has emerged as a formidable force, advancing to its strongest level against the dollar since November.

The currency climbed as much as 0.1 percent to 7.1447 per dollar, powered by a potent combination of a weakening greenback and a powerful rally in local equities.

Investor sentiment is being further supported by expectations of sustained capital inflows ahead of the country’s September 3 ‘Victory Day’ parade.

The People’s Bank of China has added its own muscle to the move, repeatedly strengthening its daily reference rate for the currency.

The Australian inflation shock

In a blow to hopes for monetary easing, Australian consumer prices jumped by far more than expected in July.

Data from the Australian Bureau of Statistics showed the monthly consumer price index rose 2.8 percent from a year earlier, a sharp acceleration from 1.9 percent in June and well above forecasts of 2.3 percent.

The spike was driven by a surge in electricity costs. The hotter-than-expected reading immediately forced investors to slash their bets on a near-term rate cut from the Reserve Bank of Australia, with the probability of a move next month falling from 30 percent to just 22 percent.

Goldman’s bearish call: an oil glut looms

Adding another layer of drama to the day, Goldman Sachs has issued a stark warning for the oil market.

The US investment bank said in a new client note that it expects the price of Brent crude to decline to the low 50s a barrel by late 2026.

The bearish forecast is based on an expected increase in the global oil surplus, which the bank projects will widen to an average of 1.8 million barrels per day through 2026, leading to a massive rise in global stockpiles.

The bank said this glut, coupled with reduced demand, will fundamentally lower the fair value of Brent from its current mid-70s range.

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