Yuan weakens on Corporate dollar demand

The People’s Bank of China set the midpoint rate at 6.8896 per dollar prior to market open, the weakest level since April 12. Thursday’s fixing was 51 pips, or around 0.1 percent, softer than the previous fix, which was set at 6.8845, although traders and analysts say this midpoint is much stronger than their model’s predictions of around 6.8967. The weakness in the yuan midpoint came after U.S. President Donald Trump unveiled a one-page plan on Wednesday proposing deep U.S. tax cuts, but offering no fresh surprises. “While the U.S. tax reform details remain elusive, the bottom line should be dollar positive,” said Stephen Innes, senior trader at OANDA, adding he has seen a move higher for the dollar on regional currencies as dollar demand is starting to perk up. A trader at a Chinese bank in Shanghai also said corporate dollar demand in the domestic forex market rose in morning trade, which dragged down the spot yuan. Local corporates are concerned the yuan could weaken further, which would make the dollar more expensive

Daily Mail Via Reuters

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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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