Forex news for Asia trading Thursday 13 August 2015

China

  • Fitch comments on the PBOC yuan devaluation - Highlights economic challenges
  • PBOC's Yi Gang: PBOC to speed up FX market development
  • BOK says yuan devaluation is a risk to global growth
  • China: USD/CNY opening, trading above 6.4150
  • People's Bank of China (PBOC) sets yuan reference rate at 6.4010
  • Goldman Sachs liken PBOC yuan move to the Swiss National Bank EUR/CHF policy change
  • Where will the PBOC set the yuan rate today? How does the PBOC set the rate?
  • Huge explosion overnight in Tianjin, China - more
  • NZ - S&P places Fonterra on creditwatch negative
  • Japan PM adviser Hamada: Japan can offset yuan devaluation by monetary easing
  • Japan - Machine orders for June: -7.9% m/m (-4.8% expected)
  • New Zealand - REINZ House price data for July
  • UK RICS House Price Balance +44% (expected +42%) 2
  • New Zealand - Food Price Index for July: +0.6% m/m (prior was +0.5%)
  • New Zealand - Business NZ Manufacturing PMI for July: 53.5 (prior 55.1)
  • JP Morgan on oil - trend bias remains for lower, but a pause likely
  • Argentina central bank finds 17 illegal FX trading operations
  • Trade ideas thread for Thursday 13 August 2015
  • ForexLive forex technical wrap: Dollar tumbles on Fed delay thought

The debate continues ....

  • WSJ: "September is looking more certain as liftoff date for rates"
  • Here's why the Federal Reserve won't be hiking in September, and probably not until 2016

Eyes turned once again to the People’s Bank of China today, both for the yuan reference rate fixing and the following briefing from the bank.

FX movements were subdued in the lead up to the PBOC at 0115GMT. The central reference rate was set by the bank 1.1% higher for the USD/CNY (or, a 1.1% yuan weakening, if you prefer ... same) at 6.4010, compared with:

  • Wednesday's central rate was set at 6.3306
  • Wednesday's close was 6.3858

So, the big moves this week so far in the fixing:

  • Tuesday, yuan devalued at the fix by -1.9% from the prior setting
  • Wednesday -1.6%
  • Today -1.1%

For those a little unfamiliar with the PBOC operation, the central rate is set each day by the bank (Monday - Friday, except holidays, of course), and the USD/CNY is then permitted to trade in a +/- 2% band around this central rate.

The fix is announced each day at 9.15am Beijing time (0115GMT), but its often delayed a minute or so later than this. If you are joining us for the announcement of the fix, it sometimes requires a little patience .... today for example the announcement was delayed from quarter past the hour for more than 2 minutes.

Market reaction was swift, but nothing like the reactions of the previous two days. The AUD is where the brunt of the changes to the yuan have been seen in the major currencies. Today the AUD/USD dropped 50 or so points almost instantly, then recovered in the following seconds and a few minutes later dashed to a new high for day, trading above 0.7400 before settling back to where it is as I update just above 0.7380.

NZD/USD followed a similar pattern, down and then up to a new session high before settling little changed on the day.

USD/JPY had a wiggle following too, down a few points and then up to a new session high. The range on the day was not large though, just under 124.20 to a test above 124.40 pretty much covers it.

EUR and CHF traded a little stronger, EUR/USD popped very briefly above 1.1180 before then coming back under 1.1140 and settling around there as I update.

Oil is little changed on the session in a tight range. Gold, similarly little changed, a few cents down since I walked in.

Local equity markets ... the Nikkei is a little higher, up under half a percent

  • HK +0.3%
  • ASX +0.6%
  • Shanghai and Shenzen +0.3% each