0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Mixed
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Real Time News
  • Multiple time frame analysis follows a top down approach when trading and allows traders to gauge the longer-term trend while spotting ideal entries on a smaller time frame chart. Learn how to incorporate multiple time frame analysis here: https://t.co/HnzQcAXWLU https://t.co/A517hC0JAG
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/1G7CRsegRX https://t.co/jBFhVRWLyy
  • Copper prices seem to have stalled just shy of key chart resistance as geopolitical tensions weigh on the global-growth proxy. Get your copper market update from @ddubrovskyFX here:https://t.co/qseySE5dWP https://t.co/u0HoA9tVvz
  • The #Euro may pay the price for the EU’s stance on its digital sovereignty while the US Dollar eyes closely-scrutinized US fiscal stimulus talks. Get your $EURUSD market update from @ZabelinDimitri here:https://t.co/Ga3DdHod7j https://t.co/Mfhb5iqLF6
  • The Indian Rupee struggled to benefit from an unexpected RBI rate hold as the Nifty 50 inched closer to invalidating a bearish reversal signal. What is the road ahead for USD/INR? Find out from @ddubrovskyFX here:https://t.co/Zjiay6hQWT https://t.co/TvedUlvwxd
  • While the balance sheet did not set higher highs US initial jobless claims fell to their lowest since the middle of March If you invert jobless claims, it set a higher high alongside #SP500 #FoodForThought ahead of the weekend, and have a good one! https://t.co/n6SaEdnpMi https://t.co/AKNYNlUa4l
  • Copper prices seem to have stalled just shy of key chart resistance as geopolitical tensions weigh on the global-growth proxy. Get your copper market update from @ddubrovskyFX here:https://t.co/qseySE5dWP https://t.co/zuQMaDqScY
  • When is a 1.76 million jobs added to the US economy underwhelming? When it is still 12.88 million jobs from the pre-pandemic level and economists warn the subsequent gains are going to slow sharply... https://t.co/IUMBsiGYYC
  • The New Zealand Dollar may extend its surge from yearly lows as it tentatively signals a cyclical upturn. NZD/USD, NZD/JPY rates poised for further gains. Get your market update from @DanielGMoss here: https://t.co/vrOuFkvWpX https://t.co/wKbQNFAZbn
  • The US Dollar is testing key support levels against the Singapore Dollar, Malaysian Ringgit, Philippine Peso and Indonesian Rupiah following persistent losses. Get your #ASEAN currencies market update from @ddubrovskyFX here: https://t.co/qqYDELqydd https://t.co/nh7SspnIzF
Yuan Slide May Pause on PBOC's Support; July Exports Will Reveal Trade-War Damage

Yuan Slide May Pause on PBOC's Support; July Exports Will Reveal Trade-War Damage

2018-08-03 21:52:00
Renee Mu, Currency Analyst
Share:
Yuan Slide May Pause on PBOC's Support; July Exports Will Reveal Trade-War Damage

FUNDAMENTAL FORECAST FOR CNH: Neutral

  • PBOC stepped in to support the Yuan; it may continue to calm the currency next week.
  • A dilemma restricts PBOC’s monetary policy; new officials could bring fresh insights.
  • Trade figures will reveal damages of the US-China trade war; China likely was hurt more.

How to trade news? Learn with DailyFX Free Trading Guides!

The Chinese currency extended losses against the U.S. Dollar for the eighth consecutive week in both onshore and offshore markets. On Friday, the USD/CNH hit 6.9126, the weakness level for the Yuan since May 2017. Yet, the pair has pulled back following the support by China’s Central Bank. Looking forward, a heavy economic calendar have the Yuan at risk from home. In addition, the on-going US-China trade war and China’s domestic financial risks will continue to weigh on the Yuan rate.

PBOC’s RRR Hike on FX Forwards, Yuan Reference Rate & Foreign Reserves

China’s Central Bank raised the reserve requirement ratio (RRR) on foreign exchange forwards on Friday, from 0% to 20%. Chinese banks offer FX forwards to companies that want to hedge against the currency risk in the future. When the Yuan is weak, companies tend to purchase FX forwards, for instance USD forward. Then the bank that offers the product will purchase the underlying asset, USD, in the spot market, to make sure it can provide the asset in the future. Then this increases the demand in USD and then further escalate Yuan’s selling in the spot market.

PBOC’s RRR hike on FX forwards basically will increase the cost of the Yuan short. As discussed before, too fast devaluation will increase regulators’ concerns on financial risks, despite that it can help make up for some losses led by the US tariffs. In the coming week, the PBOC may continue to calm the Yuan which has tumbled for eight weeks, through the daily reference rate. Also, a panic mood in the currency market could trigger large capital outflows, which will hurt China’s foreign reserves. The July figure to be released on Tuesday will reveal some clues on the matter.

Monetary Policy Dilemma, New Yuan Loans & New PBOC/FX Officials

Concerns on the effectiveness of the country’s monetary policy have rose. China’s Politburo meeting hints that monetary policy will not be a primary tool to support the economy. It does not mean that the tool is no longer important; instead, the Financial Stability and Development Committee pointed out it is that monetary policy’s transmission mechanism needs to be improved.

With a less effective mechanism, China’s Central Bank faces a dilemma: on one hand, many companies are in short of cashes and find it hard to borrow from banks. They need more liquidity. On the other hand, the price bubble risk in the real-estate sector remains elevated, with home loads continuing to pile up. This constrains the regulator to launch broad easing measures. In the coming 1-2 weeks, China has an unscheduled release on July New Yuan Loans. The proportion of home loans will provide clues of how serious of the price bubble risk is.

This past week, the PBOC hired two new deputy governors and SAFE, China’s FX regulator, hired one. The new officials who had decades of experience in multiple financial sectors may help the Central Bank to come up better solutions to the policy dilemma and other challenges in the financial market.

July Trade Figures and US-China Trade War

China will release the exports and imports prints for July on Wednesday. The impact of US tariffs on $34 billion Chinese products to Chinese exporters (as well as US exporters) may begin to be seen. Over the past week, the two sides have taken more hostile actions than cooperative moves. And it seems that the hits on China were more harmful than the other way around:

The US Trump administration threatened to increase tariffs from 10% to 25% on the $200 billion worth goods from China. In addition, the US Commerce Department added 44 Chinese companies to its export control list. On China’s end, the Chinese Commerce Department announced to impose tariffs on $60 billion US products for retaliation. One positive move is the meeting of Chinese Foreign Affair Minister and US Secretary of State, though no real progress is achieved.

-- Written by Renee Mu, Currency Analyst with DailyFX

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

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.