ForexLive Asia FX news wrap: Yuan weakens

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading for Monday 12 October 2020 

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.

USD/offshore yuan hourly:
Forex news for Asia tradingfor Monday 12October 2020 

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%

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