ForexLive Asia FX news wrap: Yuan weakens
Forex news for Asia trading for Monday 12 October 2020
- Here are the 4 international holiday destinations that'll be in Australia's travel bubble
- Yuan trade the focus in Asia so far on Monday after the weekend PBOC policy move
- PBOC vice governor says worsening US-China relations a risk to financial network
- AUD traders (NZD too), a note for your diary - RBA Governor Lowe to speak October 15
- PBOC sets USD/ CNY reference rate for today at 6.7126
- FX option expiries for Monday, October 12 at the 10am NY cut
- BoA forecast falls for EUR/USD and USD/JPY, Targeting 1.14 & 103 respectively
- Coronavirus - South Korea to introduce mandatory mask rule
- UK's Liverpool to go to strictest “third tier” of coronavirus lock down
- Thursday October 15 EU Summit - Brexit trade talk deadline?
- South Korea 1st 10 days of October, exports per working day up 2.8% y/y
- Japan Core Machinery Orders for August +0.2% m/m (expected -1.0%)
- Japan data September PPI -0.8% y/y (vs. expected -0.5%)
- ECB's Visco says the Bank is discussing on how to review our monetary policy strategy
- ICYMI - Comments from ECB chief economist Lane nudge up ECB easing prospects this month
- Its a partial market holiday in the US on Monday for Columbus Day.
- China's new law to ban exports of some goods on national security grounds
- UK PM Johnson will reveal new COVID-19 measures on Monday
- Offshore yuan (CNH) is trading lower after the PBOC weekend rate move
- Trade ideas thread - Monday 12 October 2020
- The EU is targeting big tech companies with new rules to address market power
- ECB's Lane said the surge in coronavirus cases puts a question mark over the economic rebound
- ECB's Kazimir said the Bank will do "all we can" to get inflation to target
- Brexit - Johnson told Merkel that "significant gaps" in trade talks still to be bridged
- Monday morning open levels - indicative forex prices - 12 October 2020
- Mnuchin/Meadows call for immediate passage of relief bill using PPP leftover funds
- Pres Trump: "Looks like" I am immune
- France reports 26,896 coronavirus cases for the day - a new daily record. Positive rate is over 10%.
- MUFG trade of the week: Sell EUR/AUD
- PBOC has lowered the reserve requirements on some forward yuan FX trading. Intervention on yuan strength?
It was weekend news from the People's Bank of China that triggered the biggest forex movement for the session with the Bank cutting the requirement for financial institutions to hold cash to zero (from 20%) when their clients sold yuan for other currency in the forward FX market (see bullets above).
This is a move from the Bank that makes it cheaper to sell yuan and comes after many months of a strengthening currency. Offshore yuan responded in the early hours by dropping, CNY followed suit with the mid-rate set much higher (a higher USD/CNY is a weaker onshore yuan) than Friday.
More generally, we saw a bout of US dollar strength at kick off in the very hours, some of which has been retraced. Negotiations over US stimulus seem stalled, again. There were, of course, the usual slew of UK/Brexit trade talks to contend with, the latest being Johnson expressing he saw 'significant gaps' with the EU position.
EUR, AUD, GBP, CAD, NZD all fell against the USD with, as mentioned, some retracement (by varying amounts). USD/JPY gained early but is since fallen below its Friday US level.
The weakness for the yuan has made China's stocks more attractive ... well, something has!
- Shanghai Composite +2.3% today
- Shenzhen +2.6%
- HK gaining also, Hang Seng up near 2%