China move for a reserve currency

11 August, 2015

News overnight that the PBOC adjusted lower its daily fix for the Chinese renminbi against the US dollar sent USDCNY flying to levels not seen for three years and caught many off guard. It could been seen as a retaliation to the IMF’s recent announcement that they believe it’s too early to give it reserve currency status. The PBOC aims to move the renminbi to a freer floating and accessible currency, prerequisites for it to be given the IMF’s reserve stamp of approval and will see it move in a wider band. The move should also act as a stimulus to Chinese exporters and assist in injecting a little inflation domestically in the face of the continuing decline in commodity prices. The move hit the Aussie with AUSUSD tumbling to hit a low just above 0.7300 and if we see the next leg higher in the dollar, the Aussie could lose further ground.

Yesterday’s comments about low inflation from Fed vice chairman Stanley Fischer snuffled out the flames light by Dennis Lockhart last week causing the dollar and US Treasury yields to retreat. This shows how next month’s FOMC meeting and interest rate decision is finely balanced. With the words “data dependent” being more widely used special scrutiny will be given to US data releases with Thursday’s retail sales being this week’s highlight as today sees yet another quiet economic calendar apart from the German and Eurozone ZEW surveys.


Source link  
Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...

Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...


Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

Risk-sensitive currencies on the rise

Stock markets show growth after the release of strong data for China and Japan as their respective PMIs were better than expected which supported...

Trump again puts pressure on OPEC

President Donald Trump told OPEC on Thursday that its members should start pumping more oil, marking his second warning to the producer group this year...


Turkish lira fell by 5% before elections

The Turkish lira dropped by as much as 5 percent against the dollar on Thursday morning, as the country gears up for elections this weekend. The greenback...

May won't ask for a long Brexit delay

Prime Minister Theresa May won't ask the European Union for a 'long' delay to the Brexit deadline, her office said, after pro-Brexit ministers objected...

Demand for safe assets grows

Markets remain under moderate pressure, despite the Fed comments. Powell's semi-annual speech in Congress reinforced expectations that the US Central Bank...

  


Share it on:   or