Mon, Nov 30, 2020 @ 19:46 GMT
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The US Dollar Edges Lower

Hopes of fiscal stimulus weighs on US dollar The US dollar quickly reversed its gains overnight as the US fiscal stimulus news hits the wires. In the end, the dollar index finished barely changed at 92.29. It will be eyeing support at 92.12 and 91.75 into the end of the...

China Leaves Rates Unchanged

PBOC holds rates as economy remains strong China left its one and five-year Loan prime Rate benchmarks unchanged this morning at 3.85% and 4.65% respectively. The decision should be of no surprise with China’s economy firing on all cylinders. Even a Covid-19 slowdown from the US and Europe impacting exports...

Dollar Remains Stuck In Neutral Gear

US dollar steady Momentum has waned in the bearish US dollar trade as well. Although the dollar index faded by just 0.13% overnight, it has recouped that loss in Asia this morning, rising back to 92.47. Suspected intervention by South Korea and Thailand to buy US dollars seems to have...

Currency Markets Drifting

US dollar drifts on soft retail sales The US dollar drifted lower overnight following disappointing US Retail Sales and with increasing concerns about the downstream effects of the resurgent Covid-19 pandemic. The data saw US Treasury yields move lower as well, and I suspect that Q3's gains will be much...

China’s Economic Recovery and Less Policy Accommodation Lend Support to Renminbi

The latest set of economic data in China reflects that recovery continued in October. Growth was seen in both the supply and demand sides. However, while supply side continued to expand more than anticipated, the consumer spending did not perform as strong as market expectations. PBOC has recently mentioned...

China Economic Update and Outlook

Executive Summary China continues to lead the world in the containment of COVID as new confirmed cases are minimal. This apparent success can likely be attributed to early lockdown protocols, significant testing and other healthcare procedures designed to mitigate the spread of COVID, allowing for the economy to re-open...

Dollar Rebounds As Stimulus Talks Fizzle

The US dollar recoups losses The US dollar recouped all of its previous day’s losses overnight, as the stimulus trade ran out of momentum and US Treasury yields continued to firm. The US dollar index rose 0.35%, rallying back through 93.00, with US dollar strength continuing this morning. Amongst the major...

US Dollar Dips Despite Political Risk

US dollar declines despite stimulus and election uncertainty The US dollar bucked the risk-off tone sweeping financial markets overnight, with the dollar index plunging 0.50% to 92.60, carving through major supports at 93.00 and 92.75. Much of the fall, though, can be attributed to the strong performances of the sterling...

Stimulus Trade Keeps On Giving

US stimulus talks boost Asia markets Asian markets are in a positive frame of mind this morning as discussions continue on a new US fiscal stimulus package. Democrat House Leader Nancy Pelosi’s deadline of Tuesday for an agreement that can be enacted before the election has been mostly ignored. Markets,...

Currency Markets In Doldrums

Currency markets range trade overnight With the exceptions of the British pound, which continues to defy gravity on hopes of a Brexit agreement, currency markets contented themselves with directionless range trading. The US dollar index eased 0.14% to 93.40 in a non-descript session. The story is much the same with regional...

China Signals Slower Yuan Appreciation

The People’s Bank of China (PBOC) took steps over the weekend to slow the Chinese yuan’s (CNY) recent appreciation, by removing financial firms’ requirements to hold a 20% reserve when buying foreign currency for a forward settlement. That has seen the offshore yuan (CNH) fall by 0.53% this morning...

PBOC Moves to Curb Renminbi’s Strength

PBOC announced over the weekend to lower the FX risk reserve ratio for forward foreign exchange sales from 20% to 0, effective October 12. The move is likely a response to the strength in renminbi (a.k.a. RMB, CNY). The central bank pledged to “maintain the flexibility of the RMB...

PMIs Suggest China’s Recovery Remained Intact in September. Yield Differential to Support CNY

The latest economic indicators show that China’s economy continued to recovery in September. NBS’ official manufacturing PMI climbed +0.5 point higher to 51.5 in September, beating consensus of 51.3. The non-manufacturing PMI also increased to 55.9 from 55.2 in August. The composite index gained +0.6 point to 55.1 last...

Dollar Softens in Quiet Markets, RBNZ and SNB to Meet This Week

The markets are rather quiet in Asian session with Japan on holiday. Some selloff is seen in Hong Kong stocks but others simply ignored. The forex markets are generally stuck inside Friday's range, with Dollar and Swiss Franc trading with a soft tone. On the other hand, Aussie and...

PBoC kept LPR unchanged for the fifth straight month

China's PBoC kept its benchmark lending rates unchanged for the fifth consecutive month today. The one-year Loan Prime Rate was held at 3.85%. Five-year LPR was kept at 4.65%. That was basically in line with market expectations. Recent economic data from China suggested that the economy is on track for...

Markets Are Preparing For A Dovish Fed: No Reason To Tow Against The Current Tides

Markets Catalysts that supported Asian dealings yesterday remained the driver for European and US markets yesterday in absence of any other guidance. Optimism about a Covid-19 vaccine and some M&A activity suggesting the economy is picking up again pushed European stocks higher at the opening but momentum was lost soon....

Upbeat August Chinese Data Suggests PBOC to Leave Rates Unchanged for Longer

The latest set of macroecononmic indicators in China suggests that economic activities surprised to the upside in August. Growth in industrial production accelerated while retail sales gained first the first time since February. Better-than-expected data in August signals that it is less likely for PBOC to cut interest rates. Industrial...

Sharp Rise in Manufacturing PMI Signals that PBOC will Keep the Powder Dry for the Month

China's manufacturing PMI (by Caixin) rose to almost a decade high of 53.1 August, from 52.8 a month ago. This indicates that China’s manufacturing activities have been expanding over the past 4 months and the rebound has accelerated. The accompanying report noted that output and new orders showed biggest...

PBOC’s Restraint Monetary Policy will Continue to Support CNY vs USD. US-China Tensions as Major Downside Risk

Renminbi (a.k.a. RMB, CNY) has strengthened against US dollar over the past 3 weeks. While the broad-based USD weakness is the key reason, PBOC's neutral policy action over the past months has also led to renminbi's appreciation. We expect the phenomenon would persist, supporting renminbi, in coming months. PBOC announced...

Yen Rebounds as Treasury Yields Retreat, Dollar Stays Pressured in Range

Yen rises broadly today as global treasury yields appear to be turning south. In particular, US 10-year yield is back below 0.7 handle in pre-markets. Dollar is pressured but holds on to recently established range. But overall markets are mixed with major European indices bounded in tight range. Australian...

Equities Mixed In Early Asia

Quiet start for Asian markets Wall Street cruised into the end of the week with the S&P 500, Nasdaq and Dow Jones finishing almost unchanged on Friday. Without any direction from New York, and after a quiet weekend, Asia has been left to its own devices, leading to a mixed...

PBoC Liquidity Boosts Sentiment. Stalemate US Fiscal Talks, US-China Tensions Are Leading Risks

Equities in Asia kicked off the week on a mixed note. Nikkei (-0.63%) fell as the data showed the Japanese economy contracted 7.8% in the second quarter and 27.8% on annualized basis, the worst figures on record, as the pandemic took a heavy toll on consumption, capital expenditure and exports....

An Orderly Start To The Week

The weekend was relatively quiet on the news front, with no notable market-moving headlines. However, it did contain its usual substantial quota of human misery headlines, which clearly sell more newspapers. Most notable was the indefinite postponement of the US/China trade agreement review, to give China more time to...

Euro Mildly Higher in Mixed Markets, Kiwi Down as Election Postponed

Euro strengthens mildly in generally mixed Asian markets today. There is no clear direction as Japan stocks diverge from others while gold and oil are rangebound. Canadian and Australian Dollar are following as the next strongest but movements are limited. Yen and Dollar are trading with an undertone. But...

PBoC kept MLF rate at 2.95% for 4th month, USD/CNH softer in range

China's central bank PBoC rolled over CNY 700B maturing medium-term loans today. Rate was kept at 2.95%, unchanged for the fourth straight month. The injection was well above the two set batches of MLF that are set to expire in August, totalling CNY 500B. Markets are expecting no change...

The US Dollar Is Lower Across The Board

USD sags, the yen is on the move Currency markets are on the move today in Asia, with the momentum of the US dollar rotation spilling into regional currencies, as well as major currencies. The dollar index smashed through support at 94.65 on Friday, falling 0.45% to 94.35. It has...

US Dollar Sell-Off Continues At A Reduced Pace

The rotation out of US dollar continued overnight, albeit at a less frenzied pace than the day before. Currency markets are almost entirely ignoring the US intention to close China’s Houston consulate. The US dollar index fell 0.20% to 94.95 and has eased slightly again in Asia, to 94.92....

PBOC Left Policy Rate Unchanged for Three Months, Affirming Targeted Monetary Easing Stance

PBOC has left the policy rate, the 1-year loan prime rate, at 3.85% in July. The 5-year loan prime rate also stays at 4.65%. The decision has been widely anticipated, as the medium lending facility (MLF) rate, the guidance rate for the LPR, was also kept unchanged at 2.95%...

Global Equities Begin The Week On The Back Foot

Shares across global markets are trading in negative territory early Monday with one exception, as China's Shanghai Composite traded 2.5% higher after the People's Bank of China (PBOC) kept their benchmark lending rate unchanged. Commodities more sensitive to the real economy were also on the backfoot with Oil and...

Positive Sentiment Weakens The US Dollar In Asia

US dollar dips, Indonesia rupiah strengthens The positive start by Asian equity markets has flowed into currency markets this morning, with the US dollar gently easing versus both major and regional currencies. The dollar index has fallen by 0.25% to 96.44 today. The euro, British pound and Australian dollar are all...