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Breaking news

Fed Leaves Rates, QE Unchanged, FOMC Sees 2 Rate Hikes in 2023

Real Time News
  • one of the few trends that hasn't yet turned around - the $USD, still pressing higher $DXY https://t.co/iEW04U3dVE https://t.co/siOzTtNk2H
  • Fed's Powell: - 2022 will be a really good year, with substantial job development as a result of growth - Forecasts show that next year will be a fantastic year
  • Fed's Powell: - Inflation will be higher by 2023, according to the Fed, due to high jobs - For next year, we are looking at an economy that will not have the same degree of fiscal support
  • Fed's Powell: - Inflationary pressures are expected to increase in the near future as the economy reopens - By 2023, inflation forecasts would more accurately represent increased resource use
  • Fed's Powell: - It would be premature to call the pandemic "defeated" - Clearly, since the March meeting, FOMC policymakers have become more optimistic about the economy's prospects
  • Fed's Powell: - We expect the current high inflation readings will begin to decline - In inflation expectations increase, contrary to our base case, we will take steps to reduce them
  • rally started about 15 mins into the presser but stocks are really liking what Powell has been saying $NQ hasn't quite clawed back the entirety of the move but, its been a one way train past half hour $NAS $QQQ https://t.co/npB1zLrDyr https://t.co/MWOGdfXsTi
  • If you're watching the Dollar, keep an eye on $USDBRL with the Brazilian central bank rate decision due in a little with an expected 75bp rate hike
  • I think Powell is right about a stronger labor market coming down the pipeline: - UI ends - schools reopened fully - vaccination rates increase - lockdown/distancing measures lifted
  • Fed's Powell: We are working on a supplementary leverage ratio, but there is nothing specific to share at this time
China's Market News: Yuan Rate Drops, Credit Risk Increases

China's Market News: Yuan Rate Drops, Credit Risk Increases

Renee Mu, Currency Analyst

This daily digest focuses on Yuan rates, major Chinese economic data, market sentiment, new developments in China’s foreign exchange policies, changes in financial market regulations, as well as market news typically available only in Chinese-language sources.

- The PBOC weakened the Yuan for the third straight day on Wednesday after the week-long hiatus.

- China’s Premier told that the central government supports Macau to become a key Yuan settlement center.

- Multiple firms with a large mount debt have entered into bankruptcy restructure; the overall credit risk is increased.

To receive reports from this analyst,sign up for Renee Mu’ distribution list.

Yuan Rates

- The PBOC set the Yuan weaker against the U.S. Dollar on Wednesday, the third consecutive day after a week-long holiday. The Central Bank guided the Yuan by -160 pips or -0.24% lower against the U.S. Dollar to 6.7258, marking a new six-year low. The offshore USD/CNH traded around the Yuan fix during the session. As we discussed yesterday, technical levels are in focus for the pair in the near-term.

USD/CNH 1-Day

China's Market News: Yuan Rate Drops, Credit Risk Increases

Prepared by Renee Mu.

The PBOC also tightened the onshore liquidity for the third day in a row. On Wednesday, the regulator reduced a net of 165 billion Yuan cash, following a net withdrawal of 90 and 100 billion Yuan on Monday and Tuesday respectively. Despite the withdrawals, Yuan’s onshore borrowing rates either continued to drop or remained little changed. The SHIBOR O/N, 1-week, 2-week and 1-month fell -0.30, -1.10, -0.70 and -0.32 respectively. This indicates relative low demand in onshore Yuan liquidity.

China's Market News: Yuan Rate Drops, Credit Risk Increases

Data downloaded from Bloomberg; chart prepared by Renee Mu.

Market News

Sina News: China’s most important online media source, similar to CNN in the US. They also own a Chinese version of Twitter, called Weibo, with around 200 million active users monthly.

- China’s Premier Li Keqiang said that the Chinese government supports Macau to become a key center for Yuan settlement. Also, the central government will promote the creation of a fund headquarters in Macau set up by China and Portugal. Macau, a special administrative region of China, was ruled by Portugal for more than a century until 1999. As a result, the region is considered to be a gateway between mainland China and the Western world, similar as Hong Kong. The establishment of a Yuan clearing center for Portuguese-language nations in Macau is expected to further promote Yuan’s global use.

Hexun News: Chinese leading online media of financial news.

- Chinese firms’ credit risks have been increasing of recent, according to a report issued by CITIC Securities. In late September, LDK Solar, a solar wafer producer, was forced to enter into the bankruptcy restructuring process following a ruling from the local state court. At the same time, Guangxi Nonferrous Metal Group failed to submit a restructure plan within six months and thus has been declared bankrupt, making it the first bankrupt issuer in China’sinterbank market. Another troubled firm, Dongbei Special Steel, entered into the bankruptcy process on October 10th. Bohai Steel Group, also in the debt crisis, released a restructure plan in the effort to reduce its 192 billion Yuan of debt; however, the Chinese securities believes that the plan is not practical and likely to be rejected by creditors.

-To receive reports from this analyst,sign up for Renee Mu’ distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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