Asia Shares Lethargic

RENMINBI RETREAT: Chinese authorities set the yuan’s official “parity rate,” known as the fix, for the country’s tightly controlled currency 189 basis points lower to 6.8985 against the dollar. It’s the 12th day in a row Beijing has guided the yuan lower, amid suspicions Beijing is willing to let the currency weaken to help exports. The yuan, also known as the renminbi, hasn’t been this weak since the depths of the global financial crisis in 2008. The currency’s decline has hastened after Donald Trump’s U.S. election victory. He has vowed to brand China a currency manipulator as part of measures to counter what he says are unfair trade practices.

FED OUTLOOK: The dollar has also been rising against other major world currencies as investors increasingly factor in a Fed rate hike in December based on comments last week from U.S. central bank policymakers. The greenback’s nearly 7 percent again against the yen in the past week has helped boost Japan’s major exporters, which benefit because their overseas profits can be converted into more yen. Trump’s campaign promises to boost the U.S. economy by ramping up government spending and cutting red tape has lifted the dollar but investors continue to wait for concrete details.

 

ANALYST INSIGHT: “Traders are positioning for another USD leg higher, despite concerns that we are nearing a near-term pinnacle from the USD positivity of Trump mania,” said Stephen Innes, senior trader at Oanda, adding that Chinese central bank might not be willing to let the yuan weaken past 7.0 to the dollar. “Up until now, the People’s Bank of China has been unperturbed about the sliding yuan, but may be concerned about the rapid pace of the depreciation enough to “pump the brakes,” he said.

ABC News

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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