Yuan under pressure
Pressure on the Chinese yuan extending into a tenth straight day, pushing the USD/CNH rate to a high of 6.61640, which is the highest since December 18. It was another red day for China shares as outflows continue amid concerns about the robustness of the China economy amid deteriorating US-China trade relations.
Kiwi sees no benefit from better trade data
The pressure filtered across to most Asian currencies, which were not able to benefit form a slightly softer US dollar across the G7 spectrum. The NZD/USD pair slid to the lowest level since November 21 last year. The slide came despite an improvement in the trade numbers, as the trade surplus increased by $294 million in May compared with April. This was above consensus, and there was a knee-jerk lift to the kiwi immediately after the data release, but it proved to be short-lived. The subsequent release of the ANZ business confidence indicator for June seemed to gain more traction. It slumped to -39 from -27.2 while the forward-looking outlook index also slid to 9.4% from 13.6%.
The next key event for the kiwi will be the RBNZ’s official cash rate decision on Wednesday (early Thursday for Asia). The latest poll by Reuters shows that economists are unanimous in predicted that the central bank will stand pat on rates, and this is echoed in our own estimate on MarketPulse.
Gold’s safe haven bid still elusive
Gold remains pressured, despite the cloud of trade wars hovering over markets, squeezing down to its lowest level vs the US dollar this year. On a technical note, it may be significant that the 55-day moving average crossed below the 200-day moving average today for the first time since May 2017. Gold is now poised at 1,256.14, with the December 12 low of 1,236.549 lurking beneath.
Risk barometer in the red (OANDA Podcast)