FXStreet (Edinburgh) – Arne Rasmussen, Chief Analyst at Danske Bank, reviewed the recent developments in the Chinese economy.
Key Quotes
“With yesterday’s announcement, China has entered the global currency war and the market has rightly reacted that way”.
“As expected, USD/CNH has overshoot USD/CNY, which is typically what we see during periods of CNY depreciation expectations”.
“In addition, Asian currencies should be hit hard – in particular AUD, NZD, SGD, MYR, KRW and TWD, whose countries have close trade links with China”.
“EUR/USD bounced on the announcement, possibly on expectations that the Fed will postpone raising interest rates”.
“However, we expect China’s FX policy to have a limited impact on US monetary policy and hence any USD sell-off should prove short-lived”.
(Market News Provided by FXstreet)