China fixes yuan below 7.0

 

Lowest fix since 2008

In its daily yuan fixing operation, the Peoples Bank of China adjusted the mid-value of the yuan to 7.0039 per US dollar, the first time it has been below 7.0 per dollar since April 2008. Despite the weakening of the yuan, the reaction in the markets wasn’t negative. US indices started off weakly but soon reversed and are now trading in the black with gains of between 0.20% and 0.45%.

In the currency spectrum, risk-beta currencies were better bid, with AUD/USD climbing 0.19% to 0.6772 while the yen was sold amid the better risk appetite. USD/JPY rose 0.09% to 106.19. The kiwi looks set to snap a 10-day losing streak versus the US dollar, and NZD/USD is now 1.2% above near four-year low of 0.6377 struck yesterday after the RBNZ surprised the markets with a deeper rate cut.

 

NZD/USD Daily Chart

Source: OANDA fxTrade

 

Trade data better than expected

Adding to the better risk appetite, China trade data for July surprised to the upside. Exports rose 3.3% y/y, sharply different from the 2.0% decline analysts had expected, while imports fell a less-than-expected 5.6% y/y. July’s overall trade surplus widened to $45.1 billion from $42.7 billion while the surplus with the US narrowed to $27.9 billion from $29.9 billion in June.

 

China regulator say manipulator label ludicrous

China’s State Administration of Foreign Exchange (SAFE) said today that the US decision to label China a currency manipulator “totally deviates from the facts and doesn’t have a leg to stand on”. It said that the FX market had been running smoothly, and reiterated that the yuan will stay generally stable as the market has already reacted to the impact of recent US escalation of the trade war.

USD/CNH has been trading in a narrow band today, now at 7.0675 and below the record high of 7.1400 seen on Tuesday.

 

USD/CNH Daily Chart

Source: OANDA fxTrade

 

A slow calendar

There’s not much to excite or move markets on the data front with a barren European calendar and a US calendar that features weekly jobless claims and wholesale inventories for June.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

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.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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