Yuan trades softer in Asia

The yuan weakened Tuesday morning in both onshore and offshore markets, while the greenback retreated against other major currency peers before the release of minutes of the Federal Reserve’s May meeting later this week.

In the spot market in Shanghai, the US dollar bought 6.8907 per yuan as of 11.45am, up 0.06 per cent from 6.8864 in the prior session. On Monday, the dollar also rose slightly against the Chinese currency.

Domestic traders are allowed to buy or sell the yuan within 2 per cent of the yuan’s daily fixing level set by the People’s Bank of China (PBOC).

Earlier in the day, the PBOC fixed the yuan’s mid-point rate at 6.8661 per US dollar, stronger by 12 basis points from the previous fix of 6.8673.

In Hong Kong, the offshore yuan also weakened, with the US dollar trading at 6.8789 per yuan, compared with 6.8782 late Monday.

 Investors will look ahead to Wednesday’s release of minutes of the Fed’s May 2-3 meeting for clues on the timing of the next rate move.

“Currently, markets are pricing in an approximately 70 per cent probability of a rate hike in June but only 60 per cent for one more rate hike in 2017,” said Stephen Innes, senior trader at Oanda Asia Pacific.

“If it becomes clear that the FOMC (the Federal Open Market Committee) are keen to move on interest rates beyond June, there remains some decent scope for year-end Fed repricing which should prop the dollar.”

South China Morning Post

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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