Forex news for Asia trading Wednesday 12 August 2015

China

  • How the PBOC yuan devaluation will impact different markets - 15 banks respond
  • IMF are loving the new yuan regime - facilitates SDR operations
  • People's Bank of China (PBOC) sets yuan reference rate at 6.3306
  • So, the PBOC contradictory comments have been resolved, for today at least
  • PBOC comments on yuan fixing today - this is normal, but won't continuously devalue
  • China - Yuan trading at a 4 year low in the offshore market
  • Does the Chinese yuan devaluation delay the Federal Reserve rate hike?
  • Westpac on AUD implications of the yuan devaluation - not a major negative
  • Let's cut to the chase - What is the impact of yuan devaluation on various markets?
  • Goldman Sachs on the PBOC yuan devaluation - "This is about Fed liftoff"
  • Economic data due from China today - and the fix!
  • PBOC assured Fund managers there'd be no yuan devaluation - 2 reasons they were wrong to believe it

And ...

  • A detailed guide on how to get started with Insider Trading!
  • Moody's comments: Australian mining companies to cut spending further
  • Aussie data - wage cost index and credit card purchases/balances
  • Australia - Westpac Consumer Confidence Index for August: +7.8% m/m (prior was -3.2% )
  • Goldman Sachs on the 20 China-exposed stocks to avoid
  • BOJ Minutes: Inflation expectations appeared to be rising
  • Trade ideas thread for Wednesday 12 August 2015
  • API crude oil inventories: -847,000 barrels
  • Moody's cuts Brazil ratings to Baa3 from Baa2

Today it was all about the People's Bank of China and yuan. Get set for that to continue for a while.

The PBOC sent out 2 conflicting signals yesterday, one that said the 1.9% devaluation was a one-off. The other that the 9.15am reference rate set was going to be more responsive to market prices. The closing rate on the USD/CNY yesterday was about 1.5% higher than the reference rate, which implied a much higher USD/CNY reference rate for Wednesday, but contradicted the 'one-off' assurance. Today's reference rate was then set about 1.6% higher than yesterday's so the 'one-off' assurance was the loser and the 'responsive to market prices' was the big winner.

The higher USD/CNY set immediately impacted on markets associated with 'risk', with global equities lower, and in the FX space a smashing for the AUD and NZD ... and other majors but to lesser extents. Regional Asian currencies copped a smashing too.

AUD/USD hit a 6-year low, trading below stops under 0.7230 before finding some bounce and then settling around 0.7250.

EUR fell a few ticks, around 15 or so before bouncing 30 odd. Cable, meanwhile, dropped harder and is around 50 points off its highs as I update.

CHF, like the EUR, gained on the session, with USD/CHF of around 20 or so points from highs.

Oil traded dwon on the API data early but recovered all of the loss and then some, only to drop on the yuan set also and to be near session lows as I update. Gold was choppy, slashed nearly $10 before recovering it all and then some.