Dollar, wees to the are watching for trade out of china this morning. It could come out this afternoon. We will be counting down to that. You have the currency, trade. Trade has been good. It the the currency has been strong. Chart 6568. There you have the onshore rate, blue. In there we go with this uptick. Unexpected growth this year are setting the weakness because of this pullback. Borrowing costs have been on the out across different cities, local governments in china. We have the fix in 17 minutes. Hopefully we will get the latest trade numbers out of china. Markets are set to open in less than 30 minutes. We are looking at what, sophie . Barrage aspare for a we have dollar weakness to contend with. Take a look at the bond market. Bonds rowling, korean bonds catching a bid has the five year yield dropped. We have stocks lower. The kospi sinking for a fourth day. A mixed bag when it comes to equity markets. Check out the currency space. The hong kong dollar surging the most since january 2016. The Malaysian Ringgit stronger, breaking through that level. On thursday,hold but the central bank did say growth in 2017 will be better than expected. We have not seen that level since october last year. I want to turn my attention to the g10 space. The kiwi leading gains. The aussie dollar trading higher by. 1 . Level,olding that . 80 rising to the highest since 2015, resistance at 81. 64. The euro at a 20 month high after mario draghi was seen as not trying too hard to talk it down. Dollaryen, 1975, the pair has been knocking out a pattern of lower highs. Test breaks below 1072 60 1. 8 retracement for the june 2016 low to the december 2016 high after it marked a new year today low on thursday. Taking a look at the commodities space, oil price up, set for the first weekly gain since july. Traders are assessing the resumption of refining operations on the gulf coast. 8 of Refining Capacity does remain shot. David a lot of factors pushing up the commodities prices. You mentioned factors out of Hurricane Irma and the weak dollar. Right, lets get you caught up on other things. Here is first word news with paul allen. China Foreign Exchange reserves posting a seventh straight gain as the yuan strengthen, its best monthly performance for a decade. The pboc says its foreign stockpile climbed 11 billion. The yuan surged thursday for the first time in 16 months. Japans economy grew less than the governments initial estimate, weighed down why declining capital expenditures. Gdp expanded by 2. 5 compared with a preliminary reading of 4 . Business spending grew. 5 . Sixthhas maintained a straight quarters of growth. Hurricane irma on a collision course with miami after battering islands. The National Hurricane forecasting a direct hit on florida on sunday, sending insurance stocks lower. A category five storm destroyed all homes on barbuda, inflicting massive damage and killing at least eight people. Three heck with fax senior worthives sold shares 1. 8 million in the days after the company were struck by a cyber attack. None of the Regulatory Filings were part of prescheduled trading plans. They only made the news public on thursday in the u. S. 143 million customers are thought to have been affected. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. David thank you. Lets turn our attention to Central Banks, the fed and in the ecb. The u. S. Might be facing a big inflation shortfall, but when you listen to the new york fed chief, he said he is on board to see more rate hikes ahead here it lets look i have. Lets look at europe. The ecb president mario draghi has essentially failed to stop its rise, approaching 1. 20. Ets get more on the story. We are joined by Kathleen Hays right now. Bill dudley, what did he say and why did he say it . Bill dudley as president of the new york fed is like the equal among equals. Know, it is always a voter so we listen with extra care when he speaks, because what our top fed officials thinking . He is seeing a gradually tightening labor market that should be boosting wages. He says a weaker dollar is also boosting import prices and will help i host inflation. He is expecting inflation to hit 2 , therefore the fed will continue to remove accommodations. He said the Hurricane Impact could boost inflation, a lot of demand for construction workers, but that could cause some inflation. Earlier, the president of the cleveland fed, a hawkish fed Bank President , said the following. She is urging rate hikes. Inflation remain for to return over the next year or so to our symmetric goal of 2 on a sustained basis. She said she is comfortable with another hike this year, and in fact waiting till march 2018 would not be gradual. She is implying that might be too slow. Timer george things it is to continue with more rate hikes. Wages are rising faster than inflation, helping consumers. I want to come back to bill dudley. In the queue and day, he was asked about janet yellen, should she be the next fed chair. We have that bloomberg exclusive saying there are six candidates in the running to be fed chair at this point in the process. Dudley, ans, bill ally of janet yellen and big supporter, lets listen. I think janet yellen has done a fabulous job. I have known jennifer years and years. We are good friends. I think she would be a fine choice and leave it there. Triumvirate of policy has been fed chair yellen, stan fischer the vice chair, and in york fed president bill dudley. Stanley fischer stepping down all the more important and not surprising that we see bill dudley echo what janet yellen has said, inflation will rise in the mediumterm and keeping the door open to another rate hike. Bill dudley did not put a date on it, but fed watchers and it could happen in december. David mario draghi basically stopped short of saying watch october. Currencies in the next, one of the better performing currencies. What did he say are not say about the currency and why is the currency, the euro, above 1. 21 . Above,. 120,ing and he said that the euro needs more monitoring and is causing uncertainty. Volatility in the Exchange Rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the mediumterm outlook for price stability. 438, not just what is happening tonight. Year, aat happened this 14 rise in the euro versus the dollar. In 2014, mario draghi expressed serious concern about the euro as it went to 1. 40. You can see the point where the euro started falling against the dollar because that is when they relaunched quantitative easing. He did say exactly that they are starting discussions now and may make an announcement and something to say about the process of bond buying in october, but said they could modify that. He is watching the data. They are projecting a stronger recovery, 2. 2 th this year. He did not guarantee anything, but it is clearly on the table. We will see when we get to the october meeting. David we have to leave it there. Thel ahead, moodys thanks potential conflict on the Korean Peninsula is now more likely than ever. We will look at what it will look like for the economy and the ratings there. Pyongyangs provocations join a longer list of investor worries. We will talk to ubs about strategy and that the uncertainty. This is bloomberg. Lets get back the markets and have a look at where we are. Half. Look at the first it has been a boring summer. Msci asiapacific, there is your tight range since mid july. S p europe has been on a down trend. Essentially youre looking at the same chart for most of the global benchmarks right now. , regionalmore insight cio at ubs wealth management. There are lots of reasons we could point to blame for this range bound summer. What is the biggest culprit . Several reasons. Markets have been on a solid run. At some point, there has to be profit taking and revaluation of positions. The north korean crisis, hurricanes in the u. S. , and other activity are the main reasons why it is not moving much. David what breaks us out of this . A few catalysts. Example. Dollar is one if it continues to weaken come you might see activity on the asian equities market. Has been a synchronized strengthening across asian fx. A few weeks lots like the peso, but it has been a weak dollar story. At some point, it will hurt some of these markets. Which markets at this point to you see might be more vulnerable to the strengthening . If you look at the chinese equities market, it has done very well, up close to 40 . You probably want to ask yourself if the strength of the yen will hurt exporters. In our view, we dont think it will happen because a lot of the gains in chinese equities markets are led by Tech Companies. If you look at secondquarter results, Tech Companies are still making solid gains. Numbers growing on a quarterly basis. We dont think that will come off. In some other cases, for example, where the Malaysian Ringgit is concerned and the ,ylan bought thailand baht the strong local currencies. David we just talked about the yuan fixing, a little shy. We were expecting this to be below six, but that is the strongest level since may 2016. I was looking at some of your calls. Tech seems to be in play, but avoid resource related names because we mightve seen the best of that group. The dollar has been weak. David how do you square that. A lot of these metals are priced in u. S. Dollars, so a week dollar is good for these guys. Year, second half of this we do expect the chinese economy to moderate. It has been on a good run. First quarter, Second Quarter above expectations, but if it slows down, you will see demand for race metals move in line with that. Where the dollar is concerned, if the ecb takes action in october david do you think they will . They need to because the strength of the euro will hurt exporters. David if not already. Absolutely. Is saying Inflation Expectations are likely to be more moderate because of the strength. We could see some announcement that could reverse the eurodollar. David you recommend underway taiwan just in case tensions between the u. S. And china when it comes to trade. Why taiwan . Why not hong kong . Taiwan is the Global Supply chain. If something happens on the north Korean Peninsula, taiwan and korea will be hurt badly. It is bound for some profit taking at some point. David help me understand this. White is the japanese yen seen as a safe haven . Do we now have to start to rethink the yen as a safe haven because japan is on the path of that missile . Its largely because of the liquidity of the japanese bonds market. Happens government you dont want your cash sitting in a bank. David japan is of is the part of the mix, or does that still apply . I think that still applies and will not change anytime soon. Theres hardly anything else. David your top trade . Dollar. Ke long canadian last nights move by the Canadian Central Bank is pretty good. We still think there is room for that to go. We think that is a trade that will do well. David fx more than equities. Nice to see you. That is the regional cio at ubs wealth management. Hai hopingwhile its new chip will make the smart phone smarter. This is bloomberg. David chinese tech giant huawei has unveiled an ai enabled chip as it prepares to launch a new smart phone to rival apples latest iphone. The company is seeking to expand its business overseas. Tom mackenzie spoke with the ceo in shanghai in an interview that began by asking how this new chip would give the company an advantage. Today smartphones arent smart enough. We need Ai Technology to improve their smart capabilities. Eight High Technology can greatly improve our efficiency. So you will have these new chips in the new smart phone. You are launching a new smart phone in october. Smartphone sales for the first half slowed, and the domestic competition is pretty strong. At the high income apple and samsung are still dominating. How do you reassess your ambitions to be the worlds number one smartphone maker . s for many years, huawei phones have seen fast growth. Im happy to see the first half that Huawei Mobile phone shipments to china and internationally increased with the average price. Huawei is headed to the number two bank spot for smartphones this year. Huawei has never set a target of being in a particular position in terms of market share. Assess as the impact from apples latest launch . How closely do you Pay Attention to what comes out of apple in terms of new devices . Apple is a Brilliant Company and we admire them. Many innovations, including the dual camera function, which is now applied to many mobile phone producers. Know that huawei is making the cloud a bigger part of the business. How do you plan to compete with amazon and baidu and other companies who have made moves in Cloud Computing and drawing revenues from the cloud . Huawei is monetizing using Technology Using user data. This is the biggest difference between huawei and other overthetop telecom companies. Our customers with by our equipment in the past. Now they buy our services and we just support them. Across the business, margins have been squeezed. I know costcutting is a big focus now for huawei. When do expect to see margins pick up again . Aftertax net profit margin was nearly unchanged from the previous year. We need to consistently improve operations, especially call structure and expenses to make huawei products more competitive. Has happenedn 4g come and now we are looking at 5g, but still a long ways off, so where do sit tween the 4g and the 5g . How do you find Revenue Streams and equipment sales, and how much of that investment in 5g and waiting for 5g to come online is pressuring revenues in that part of the business . Not only about communication among people. It is also about communication between people, technology, and equipment for the first time in human history. More than invested six hundred Million Dollars in 5g, and huawei is an important contributor to setting 5g standards. David that was the ceo of huawei speaking to Tom Mackenzie and shanghai. We are counting down to the open up markets in china and hong kong. Have a look at where we are. This is how the hang seng looks premarket. This is how things break down. 2421. Looking at here is the scatterplot. You are also watching these energy names because of this rise in oil prices. The open is next as well as trade figures out of china at some point in the next few hours. We will ask whether the numbers could spur a trade war with the united states. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. David it is 9 29 in hong kong. Less than a minute away from the open of cash markets. We are counting down to the open on the chinese mainland. A beautiful friday there. Degrees. It is a bit humid for my taste. Isthing above 40 humidity to humid for me. Lets see how markets trade when they open up. Most stocks are on the way up. Ingles from bloombergs asia headquarters in hong kong. The aussieowing trading. It moves when we have metrics out. The yellow line indicates the high. We were above that a few moments ago. It has come down a little bit. A lot of this comes down to the fact that it has been a fairly bad week for the u. S. Dollar. Breaking news out of australia. Home loans are out. 2. 9 in terms of your july home loan approvals. The estimate was 1 . Loans tolook at investors, roughly 4 . The aussie, not Much Movement there. Unsurprising, decent set of numbers. Lets have a look at the broader markets. Here is sophie. Sophie we have the hang seng opening in the green. The hk index up. 4 , chinese large caps gaining. 1 . The yuan fixing focus this morning. It is strengthening for a 10th straight they to the strongest level since may 2016. We have the offshore yuan extending declines following that fix, but the onshore rate is climbing. 6 , rising for a second straight day, the highest level since april 2016. A closer look at hong kong. The hang seng extending dont look at this red. It is still in the green. Have i. T. Stocks leading the drop in hong kong. Lenovo group the worst performer when it comes to the hong kong session. Now lets move to the shanghai composite. 1 , utilities, energy helping that benchmark move higher. Consumer staples under pressure. As for the insurance regulator, that Party Getting shut down. Lets look at the smallcap index. This is 1928. This index has been riding the yuan strength. There could be more room to run for the small caps. Local traders have built the biggest leverage since december. You can see that with the white line on this chart demonstrating a larger appetite for risk. Large caps in the spot light for the first half of the year, now small caps are starting to shine. Pulling up the board to show you some auto stocks in focus. Wall motorsat falling. They brace for the impact of hurricane her my their sales in affected regions. 20 of sales in florida. And it comes to whether offense, the knock on effect elsewhere. David we could see that show up across equity prices. Thank you for that. Firstget you caught up on word news with paul allen. Another setback for the u. S. President . Thats right. President trump has suffered a new set back on his embattled travel ban. An Appeals Panel left in place the lower court ruling. The San Francisco ruling comes ahead of an october Supreme Court showdown over legality of attempts to ban travelers from six mostly muslim countries. Sources say the white house is considering half a dozen candidates as the next fed chair, including economists and executives business experience. It had been seen as a two horse race. Other possible contenders include kevin walsh, glenn hubbard, and john taylor. Mario draghi voice concerns about euro volatility after the ecb meeting, but declined to talk about any action to stem the rise. To the Central Banks bond buying plans beyond this year, Officials Say the currents are within parameters and market expectations, but mario draghi says there is plenty of flexibility. I am pretty confident that when the policy decision time comes that we will certainly be able to exploit all the flexibility that the program has. Governor former r. B. I. Says the perception of growing intolerance in india has the potential to derail growth. He said the country must Pay Attention to signs of increased religious tension because it is becoming a worry for global investors. He says slowing growth means less ability to absorb a growing labor market. , slowing growth if it is more stays at six or so rather than going to eight or nine will imply we have a harder time absorbing this labor force coming in and creates a concern about what kinds of actions to take going forward. Paul global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. David thank you. Under half an hour possibly from the release of the latest trade numbers out of china. Expect exports to have slipped slightly in august and are predicting 6 growth ys 7 rise. Is with me in the studio. 6 is not a lot. It is a slow down from high levels. It has been a strong year for chinas export engine. There is in any particular reason behind the slowdown, but the broader story remains the factory sector and export sector in china are doing relatively ok. It is not having a bad year. Robust demand come and of course the trade deficit with the u. S. Continues. The story is over all in tact. David when do we have to start worrying about the stronger currency . Everything is stronger against the dollar anyway. When does it start to drag on the numbers . The trade weighted index is not ringing alarm bells. When the currency was weakening come at view was to boost exports. It was a counter viewpoint at the time not about Exchange Rates, but demand. This time around, there is a feeling they can ride out to the yuan where it is because Global Demand is better and the u. S. Economy is doing ok. The eurozone is rebounding and has had a strong year, so the Global Demand story is intact. When that starts to slow down, thats when the yuan might start hurting and the authorities might be tempted to let some air out. We have to get through the Party Congress first. David and we have to remain stable ahead of that. These protectionist policies from the u. S. , we have been talking about this since donald trump was elected, they have not quite materialize just yet. Should we not worry about them . Theets not forget Investigation Underway at the moment is important. Lets not forget what is happening with north korea. Even if we move from the 45 tariffs base, we have this added concern with north korea and president trumps threat to put sanctions on north korea. We have not had the trade for. Trade war. I dont think they have gone away and these concerns will linger. David north korea would be the reason why because these trading tensions are ratcheting up between the u. S. And china. Thank you. The trade numbers due out at some point this morning out of aging. From china to japan, revision, a revision, lower for secondquarter growth, revised down to 2. 5 from 4 . For more on those numbers and what they mean for the economy, we are joined by Japan Economy editor. It is quite a revision, but the 4 number was quiet a nice figure. What happened here . The big story was that business spending was weaker than the initial data showed. Group aboutestment 0. 5 much lower than the initial 2. 4 growth in the initial numbers. Growth. Dragged down the other thing to remember is japanese initial gdp numbers are notoriously soggy. They are always revised. What we are seeing is another example of that. When you see at headline number the initialit is number, you should not put too much stock in that. , thethe last five years initial numbers have been revised by one percentage or two percentage points, so we got a d revision today, so that is basically within the norm. The Silver Lining is that 2. 5 is still well above the potential. That is the backward looking picture. Thirds of we are two the way through. How is the Fourth Quarter looking . 2. 5 is still respectable. Japan is growing quite well compared to its g7 counterparts, and looks to continue that in the Current Quarter. Our forecast is Current Quarter growth that 1 , lower than last quarter, but still strong and still above that potential growth rate of 0. 8 . David on that come up we have to leave it there. That is our Japan Economy editor life out of tokyo. Coming up, moodys warning the conflict with kim jongun could badly damaged south koreas Credit Rating. Could is the operative word. We will find out how bad that could be next. This is bloomberg. David this is Bloomberg Markets asia. Lets get you caught up on what is happening with north korea. President trump says that it is not inevitable the u. S. Will go to war. Military action remain still an option. From Vladimir Putin who set the Trump Administration was willing to solve the crisis through diplomacy, but repeated his few that further sanctions would not prompt kim jongun to give up north Koreas Nuclear weapons. Lets put all this into context. This essentially gives you a snapshot of where we are when it comes to south korea. Here are your big three. We are stable in you look at this. Seenext guest says we could possible Credit Rating downgrades in the cards if and when south korea and the situation there takes a turn for the worse. Directoriate managing of Sovereign Risk Group at moodys joins us live out of singapore. Interesting report. Whos going through some of the language you guys put in your when it comes to what could possibly happen. Before we get to those implications, you raised the assessment of the geopolitical risks to what you call a moderateplus from minus. What does that mean . Let me explain. We look at geopolitical risks across all sovereigns and think about the credit implications for the economy, the government finances, the policymaking ability of these institutions. We quantify the geopolitical risks on scale that goes from very high plus for very high risk to very low minus weather is no risk. A moderate plus assessment corresponds in our view to what is low probability event of a conflict in the case of korea with a very high impact. That combination of profitability and impact gives is that moderate plus assessment. We have increased that assessment and things there is a higher risk because of a higher probability. Probabilityhink the was very low, and we have now in light of developments change that to a low probability. David tangibly trying to extrapolate certain scenarios, what would be the first thing, the first metric commit you are watching as how this affects the Credit Profile of south korea . Starting from that assessment that a conflict with have a very high impact, we do want to think about that impact. First, should it come to a conflict, then he would watch and assess the possible duration and extent of the conflict, which will be difficult to do in the first few days. We would look at the economic damage. Report, what we highlighted is that a contained, short lived conflict would have a Material Impact on the economy. The credit implications would likely be limited. We would see the government using the fiscal space to buffer the shock. That is a different situation if we look at a longer and broader conflict. Here the economic damage is probably the First Channel we think about. It would be very significant with tragic loss of life. In that case, the governments finances would weaken substantially in support of the economy and because governmental revenues would be impaired. It is policymakers in korea who to garner tools that could effectively shore up the economy. Here we are looking at a more significant credit impact. Before i ask you about that, can you define what a lengthy means . What is the difference between a short that conflict and something longer . Stage, the scenarios we are looking at, the short and contained conflict versus the longer and broader conflict, are broad scenarios. We dont want to speculate really on what is difficult to predict. By short and contain, what we mean is the conflict would last a few weeks. A longer conflict would extend over several months. David describe for us a situation where the ratings of south korea, and i am reading from your report, we need to be lowered by a few notches, not just one. It has as rating today stable outlook. That rating takes into account the low probability of big impact. If there were to be a conflict that looks like it could go on over several months and involve the broader region, then because the economy would eat so significantly affect did over a thatperiod time, then economic strength embedded in the rating and very high at the moment would be revised downward quite significantly. Think koreas fiscal strength is very high. That would also be revised down significantly. The two together would point is towards a much lower or significantly lower rating than the current aa. David have you look at the fallout beyond korea . One of the latest developments has threatened. One possible measure, imposing sanctions on other countries that do business with north korea. Is that this sort of nonmilitary scenario that perhaps could potentially result in a Significant Impact on the economy . Situation andent in the months ahead, what we described as the status quo is really ongoing tensions and regular flare ups with wordsalls and actions and , including potential sanctions by the u. S. And its allies. Embedded in our ratings for korea, china, for all the parties involved here. Immediate credit implications of that. It is only in situations leading to a conflict that we would review koreas rating. David nice to see you. Joining us live out of singapore. The exclusive interview with Russias Central Bank governor on rate cuts potentially next week. That is next. This is bloomberg. The roshan Central Bank Governors says she would discuss a reduction of rates at a meeting next week. Of 2550 basis points. She spoke at the moscow financial forum. We never give forecasts. We never give estimates of what he would do. It will be up to the board of directors that will take a decision. Record,ook at our track they have taken different decisions. We have reduced by 25 basis points, reduced by 50, and sometimes we have to laws pause to take more time to consider the matter, look at the economy, inflation figures, Inflation Expectations, and all that will determine our decision. Does that mean we can rule out, you talked about how to take in all of the factors and you are going to listen to your board and discuss all the we are, but given where with inflation, can we rule out the fact you will leave Interest Rates on hold and rule out that we will see a really big cut like a 75 aces point cut . Cut . Basis point we see potential and will probably be debating for somewhere between 0. 25 and 0. 5 . You talked about this new phase, and im curious how you perceive the inflation targets. How symmetrical is the target . Are you happy to be below it that above it . How much symmetry is there around that target and how much beingnce do you have for away from it, away from that kind of target . That is a very important question you are asking. The question has been actively debated in this country. Clearays made it very that 4 is our target, but that does not mean inflation will stay at 4 any given day, week, or month. There will be fluctuations and it will go up and down and we are prepared for that. It will be going up and down around us 4 , and we think 4. 4 and 3. 3 is within the acceptable corridor for us. What is important is to understand the nature of the situation and to come up with correct measures to respond to those. , standarding up investment. This is bloomberg. From our studios in new york city, this is charlie rose. Reporter china and japan remain an ever present competition, even as china surpassed japan as the dominant power. The growing power also calls into question the u. S. s future an influence in asia. The book asias reckoning calls into