China Markets and their Impact Overnight
China yet again is the key issue dominating markets today as for the second day running the People’s Bank of China taken the step to act for the second day running. Today the USDCNY soared by another 1.6% to 6.5890 and could have set another dangerous precedent, and has most definitely continued the “currency wars”. The issue regarding this latest move is not just what this means for just China, but what implications this has on the monetary policy around the world.
The move could well derail any plans for a US rate hike in September, as the US worries about the lower Yuan and the implications this could well have on the Oil price could have an implication on the inflation picture, even though the US prefer to look at Core CPI that strips out energy. Either way this is likely to cause a lot of worries over the stability of some of the major markets and will put more emphasis on the Chinese state visit to the US in a month’s time.
The yuan has fallen almost 4 percent in two days since the central bank announced the devaluation on Tuesday, but sources involved in the policy-making process said powerful voices inside the government were pushing for it to go still lower.
Their comments, which offer a rare insight into the argument going on behind the scenes in Beijing, suggest there is pressure for an overall devaluation of almost 10 percent.
MARKET PULSE
China set its reference rate 1.6 % lower at 6.3306 to the USD
China’s 2nd currency devaluation in two day
PBOC: China’s Yuan fixing today reflects yesterday’s market close:
China’s shock boosts USD in safety bid; AUD at six- year low
Currency rout goes global as former IMF Chief Jen sees risk of 50% loss on China
China’s devaluation shock seen reigniting currency wars in Asia
First blood to Russian ruble in new currency war as decline exceeds Yuan
Vietnam widens dong’s trading band after China devalues Yuan
PBOC will likely use open-market FX operations to try to reduce sharp volatility
PBOC implies to restore CNY competitiveness on a REER basis
Greek deal hits German turbulence as lawmakers balk at timetable
Today: Euro-zone industrial production
Today : U.K. jobless claims and unemployment rate
The DJIA fell 212.33 points, or 1.21 %, to 17,402.84
RBI is likely to continue buying FX as reserves
RBI FX reserves should be sufficient to weather two contagion shocks ($20 Billion each)
India- Will not become a part of the currency wars
FOREIGN EXCHANGE
MARKETS
USD/JPY +0.10% at 125.25 (range 125.04-125.26)
EUR/USD +0.16% at 1.1060 (range 1.1025-1.1065)
AUD/USD -0.79% at 0.7246 (range 0.7216-0.7326)
USD/CAD +0.21% at 1.3142 (range 1.3084-1.3158)
GBP/USD -0.15% at 1.5549 (range 1.5535-1.5589)
USD/CHF -0.18% at 0.9863 (range 0.9861-0.9890)
FACTORS
China set its reference rate 1.6 % lower at 6.3306 to the USD
China’s 2nd currency devaluation in two day
PBOC: China’s Yuan fixing today reflects yesterday’s market close:
China’s shock boosts USD in safety bid; AUD at six- year low
Currency rout goes global as former IMF Chief Jen sees risk of 50% loss on China
China’s devaluation shock seen reigniting currency wars in Asia
First blood to Russian ruble in new currency war as decline exceeds Yuan
Vietnam widens dong’s trading band after China devalues Yuan
PBOC will likely use open-market FX operations to try to reduce sharp volatility
PBOC implies to restore CNY competitiveness on a REER basis
Greek deal hits German turbulence as lawmakers balk at timetable
Today: Euro-zone industrial production
Today : U.K. jobless claims and unemployment rate
The DJIA fell 212.33 points, or 1.21 %, to 17,402.84
GOLD
MARKETS
Gold spot lost 0.6 % and gained 0.4 % before trading at $1,112.48 in Asia
Gold December Futures fell 0.4 % to $1,103.80
Silver fell 1 % to $15.2095
FACTORS
China’s 2nd currency devaluation in two days
Weaker Yuan would make it more expensive for China to import gold
The Weaker Yuan could potentially extend the weak Chinese demand
The post China Markets and their Impact Overnight appeared first on Live Trading News.