Tag Archive: $CNY

FX Daily, September 12: Focus on the ECB, while the Dollar Slips below CNY7.09

Overview: Some gestures in the US-China trade spat have given the market the reason to do what it had been doing, and that is taking on more risk. Equities are higher in Asia Pacific and opened in Europe higher before slipping. The MSCI Asia Pacific and the Dow Jones Stoxx 600 are advancing for the fourth consecutive week.

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Dollar (In) Demand

The last time was bad, no getting around it. From the end of 2014 until the first months of 2016, the Chinese economy was in a perilous state. Dramatic weakness had emerged which had seemed impossible to reconcile with conventions about the country. Committed to growth over everything, and I mean everything, China was the one country the world thought it could count on for being immune to the widespread economic sickness.

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FX Daily, September 04: HK Concession and Better EMU PMI Overshadows Self-Inflicted Trade and Brexit Woes

Risk appetites have been bolstered by three developments. The UK appears to have taken a tentative step away from leaving the EU without a deal. Hong Kong's Chief Executive Lam has agreed to formally withdraw the controversial extradition measure that had been suspended.

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What Happened Monday

Markets in the US and Canada were closed on Monday for national Labor Day holidays. Here is a succinct summary of key developments that will set the backdrop for Tuesday. On September 1, the new round of tariffs in the US-China fight took effect. The US placed a 15% tariff on around 3000 Chinese goods that thus far had escaped action.

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FX Daily, August 30: US Dollar Finishing August on Firm Note as Euro nears Two-Year Lows

Global equities are advancing at least in part on ideas that trade tensions are easing. China announced it would not take immediate action on the five percentage point increase in levies that the US announced strictly in response to China's retaliatory tariffs. A lull between blows is not the same thing as de-escalation or truce.

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FX Daily, August 28: Optimism about Italy Creeps Back in but Sterling Heads the Opposite Way on Brexit Realities

The capital markets have turned quiet. There have been no more headline bombs about trade, and China set the dollar's reference rate much lower than projected. Asia Pacific equities were mixed. Hong Kong, China, India, and Singapore were on the downside, while Taiwan, Korea, and Australia rose.

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FX Daily, August 27: Realism Fights Back After Hope Dominated Yesterday

Hope triumphed over realism yesterday, and realism is fighting back toward. Asia Pacific markets, however, traded on the echo from the recovery in North America on Monday. The MSCI Asia Pacific recouped part of yesterday's drop, led by Chinese markets. Hong Kong was the main exception.

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FX Weekly Preview: The Week Ahead is not about the Week Ahead

It's the last week of August. Several economic reports will be released in the coming days. They include the US deflator of consumer expenditures that the Federal Reserve targets, China's PMI, and the eurozone's preliminary August CPI. It is not that the data do not matter, but investors realize the die is cast.

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FX Daily, August 22: Tick Up in EMU PMI Does Little, Waiting for Powell

Overview:  Soft data in Asia and the continued decline in the yuan (six days and counting) prevented Asian equities from following the US lead from yesterday when the S&P 500 advanced by 0.8%.  European shares are paring yesterday's 1.2% advance despite an unexpected gain in the EMU flash PMI.  US shares are little changed in the European morning.

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That Can’t Be Good: China Unveils Another ‘Market Reform’

The Chinese have been reforming their monetary and credit system for decades. Liberalization has been an overriding goal, seen as necessary to accompany the processes which would keep the country’s economic “miracle” on track. Or get it back on track, as the case may be. Authorities had traditionally controlled interest rates through various limits and levers.

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FX Daily, August 15: Animal Spirits Lick Wounds

Overview:  It took some time for investors to recognize that the scaling back of US tariff plans was not part of a de-escalation agreement. There was an explicit acknowledgment by US Commerce Secretary Ross that there was no quid pro quo. The US tariff split was more about the US than an overture to China. 

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FX Daily, August 14: Markets Paring Exaggerated Response to US Blink

The US cut its list of Chinese goods that will be hit with a 10% tariff at the start of next month by a little roe than half, delaying the others until the mid-December. This spurred a near-euphoric response by market participants throughout the capital markets. However, as the news was digested, it did not seem as much of a game-changer as it may have initially.

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FX Daily, August 12: Yen Remains Bid, While Macri’s Loss in Argentina Weighs on Struggling Mexican Peso

Overview: China again tried to temper the downside pressure on the yuan, and this appears to be helping the risk-taking attitude. Many centers in Asia were closed today, including Japan and India, though most of the other equity markets advanced modestly, including China, Korea, and Australia. Europe's Dow Jones Stoxx 600 opened firmer but is staddling little changed levels unable to stain any upside momentum.

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The Myth of CNY DOWN = STIMULUS Won’t Die

On the one hand, it’s a small silver lining in how many even in the mainstream are beginning to realize that there really is something wrong. Then again, they are using “trade wars” to make sense of how that could be. For the one, at least they’ve stopped saying China’s economy is strong and always looks resilient no matter what data comes out.

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Yes, the Dollar is Above CNY7.0, but No, the Sky is Not Falling

The world's two great powers are at loggerheads. Chinese nationalism meet your sister, US nationalism. Import substitution strategy of Made in China 2025 meet your cousin Make America Great Again. Paradoxically, or dialectically, the similarities are producing divergent interests that extend well beyond economics and trade policy.

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FX Daily, August 7: Three Asian Central Banks Surprise Investors

While investors keep a watchful eye on the dollar fix in China (a little firmer than projected) and tensions with the US, two other developments compete for attention. The Reserve Bank of New Zealand and the central banks of India and Thailand surprised the market with lower rates. The RBNZ cut by 50 bp, India by 35 bp, and the fact that Thailand cut at all was unexpected.

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FX Daily, August 6: Markets Stabilize with Help of CNY Fix in Muted Turnaround Tuesday

Overview: The escalation of the economic conflict between the world's two largest economies is dominating the capital markets.  The US cited China as a currency manipulator after the North American markets closed, ensuring the troubled start to Asian trading after the US equities and yields plummeted on Monday.  The VIX surged to 25%, doubling in the past week.

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Cool Video: The implication of CNY7.0+

President Trump's tweets last week announcing the end of the tariff truce signaled a new phase in the US-Chinese tensions.  China responded as did investors.  I was fortunate to have been invited to the Bloomberg set to discuss the issues of the day.

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FX Daily, August 5: China Strikes Back

Overview:  Chinese officials took the US tariff hike quietly last week but struck back today.  The PBOC fixed the dollar higher (CNY6.90), which it has not done, and will halt imports of US agriculture. The dollar shot through CNY7.0 to finish the mainland session a little above CNY7.03 and CNH7.07 for the offshore yuan. 

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