Published January 15, 2024
China’s interest rate stabilization impacted U.S. dollar, Yuan
The U.S. dollar experienced a decline during early Monday trading as investors once again speculated that the Federal Reserve (the U.S. Central Bank) would soon reduce interest rates. Additionally, the yuan dropped to its lowest level in a month following the unexpected decision by China’s central bank to stabilize interest rates in the medium term. This move was aimed at supporting China’s struggling economic recovery in the aftermath of the coronavirus pandemic.
As a result, the yuan weakened in China’s domestic trading, reaching a monthly low of 7.1813 against the dollar. In overseas trading, it fell to 7.1906 against the dollar, approaching the one-month low recorded on Friday.
Meanwhile, the British pound fell by 0.1 percent to $1.2730, although it remained close to the two-week high reached last week. The euro, on the other hand, remained near the $1.10 threshold and experienced a 0.13 percent increase in the latest trade, reaching $1.0964. The dollar index declined by 0.1 percent to 102.30 points, following significant fluctuations in the past two sessions.
Based on recent data showing an unexpected decline in the U.S. Producer Price Index (PPI) in December, the Fed is expected to commence interest rate cuts in March. This development led to a decrease in Treasury yields.
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SOURCE: www.economymiddleast.com
RELATED: FX Week Ahead: GBP/USD, AUD/USD and USD/JPY
Published January 15, 2024
- Major event risk stemming from the UK: unemployment and inflation data
- US rates market ramps up the likelihood of cuts from March, bond yields sour, but DXY maintains trading range possibly on safe haven appeal
- Chinese Q4 GDP data to inform global economic outlook
- The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library
US DOLLAR HANGS ON DESPITE WEAKER TREASURY YIELDS AND MORE AGGRESSIVE RATE CUT FORECASTS
The US dollar holds its current trading range despite lower yields and more imminent rate cuts. The US 2-year yield continues its six-day decline and markets anticipate nearly 25 basis point cuts each meeting from March until November. However, keep in mind the Fed tend not to adjust rates in the lead up to presidential elections meaning we effectively have fewer windows for the Fed to act.
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SOURCE: www.dailyfx.com
RELATED: Dollar wobbles; yuan on guard ahead of China data dump
Published January 12, 2024
The dollar ebbed on Monday on renewed expectations of a rate cut by the Federal Reserve in March, while the Chinese yuan struggled near a one-month low ahead of a slew of economic data this week.
China’s fourth-quarter gross domestic product, or GDP, December industrial production, retail sales and unemployment rate are among the economic indicators out on Wednesday, which are likely to provide further clarity on the pace of recovery in the world’s second-largest economy.
Traders also have their eye on a reading on UK inflation due later in the week, as the market focus remains on how soon major central banks globally could begin easing rates this year.
The euro hovered near the $1.10 mark in early Asia trade, with the single currency last at $1.0946.
Sterling stood near its two-week peak hit last week and last bought $1.2732, while the dollar index
was flat at 102.50, having drifted largely sideways over the past couple of sessions.
