Yuan higher as dollar pulls back

The Chinese yuan strengthened slightly against the US dollar Thursday, as the greenback suffered broad losses versus a basket of major currency peers.

In the spot market in Shanghai, the US dollar bought 6.8854 yuan as of 3pm, down 0.04 per cent from 6.888 yuan late Wednesday.

In Hong Kong’s offshore market, the dollar was lower at 6.8812, compared with 6.8854 in the prior session.

Earlier, the PBOC cut the yuan’s mid-point rate to 6.8664, weaker by 128 basis points from the previous day.

The ICE US Dollar Index, a measure of the greenback’s strength against a basket of other currencies, dipped 0.04 per cent to 99.799 in afternoon trade.

Analysts said market conditions are relatively quiet as investors turned risk-off amid a number of uncertainties, including geopolitical risks, the UK snap election, and the first round of French elections this weekend

“We’re seeing a greater propensity for position unwind this week due to the high level of investor anxiety over the French election narrative,” said Stephen Innes, a senior trader at Oanda Asia Pacific.

“With so many uncertainties offering few incentives for investors to re-engage risk exposure, clearly there is little market bravado, as dealers appear to be disposed to participate after the fact, rather than play the post-election knee-jerk,” he said.

South China Morning Post

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes