ASIA MORNING CALL: The week of plenty

Monday's economic calendar is dominated by a number of Chinese data points - Industrial Production (IP), Fixed Asset Investment (FAI) and Retail Sales - set for release at 12pm AEST. 

The figures build into how markets are viewing the strength of the economy at the moment against ongoing trade tensions and slowing economic growth, though don't be surprised if less Monday liquidity and returning traders from Mid-Autumn Festival celebrations draw a cautious reaction especially give more pressing events later this week. 

Should August IP y/y print in line with 5.2% consensus, expectations not seen at such lows since 2009 - it would be a slight improvement on the previous month's 4.8% showing. Taking into account IP numbers have also missed consensus in 4 out of the last 5 months, I'd throw caution to the wind and lean towards a more likely miss at this point. 

Retail Sales, furthermore, is polling 7.9% y/y with early indications that the significant decline in August passenger car sales will cap any upside risks for this print. Ongoing uncertainty surrounding the tidy conclusion of US-China trade talks continues to weigh on investment decisions, and therefore, is likely to moderate any FAI bullishness against 5.6% y/y expectations.

With last week's positive US-China trade developments still front of mind, I'd expect USDCNH to fade a weak print. Look to resistance at Friday's high (7.065) and support around last week's low (7.03).
 

An attack on Saudi Arabia's second largest oil field, Khurais, by unmanned aerial drones is galvanising energy markets at open.

Brent Crude Futures +18%, WTI Crude Futures +14.5%, Heating Oil Futures +6.5%, Gasoline Futures +11%. 

The weaponised drones which disrupted Saudi's oil production, setting ablaze key facilities, has withdrawn 5.7mm bbl, or around half of Saudi Arabia's production capacity. With Saudi Arabia making up more than 10% of the world's oil production, estimates from those closest to it suggest global production will temporarily see ~5% of oil supply disrupted because of the attacks. 

Yemen Houthi Rebels have claimed ownership, however, markets (myself included) remain skeptical as to who is exactly at fault. The US blames Iran, while some say Russia. Others, theorists, suggest The US itself could be at blame (4 degrees of seperation... think about the genesis of ISIS) given it's strong oil position globally, benefiting from higher oil prices.

Irrespective of the antogonist, look for geopolitical tensions and risk-off sentiment to heighten as a result, putting bearish pressure on USDJPY. Also, I'd expect traders to fade the gap up across the Brent Crude complex as questions to how other global oil producers (US, Russia) respond to the supply disruption remain unanswered.