Dollar creeps higher as virus worries return By Reuters


© Reuters.

By Tom Westbrook

SINGAPORE (Reuters) – The dollar found a footing on Wednesday as investors returned to safe-havens, unwinding some risk currency gains made on hopes the coronavirus crisis in Europe and New York was slowing.

The greenback rose on most majors besides the safe-haven Japanese yen, a day after suffering its worst drop against a basket of currencies in nearly two weeks.

Safe-haven gains were slight but gathered pace in morning trade as the two-day rally in Asia’s equity markets lost steam and bonds and gold firmed. [MKTS/GLOB]

The U.S. currency rose most against the risk-sensitive Australian and New Zealand dollars, gaining about 0.5% on each to sit at $0.6142 per and $0.5951 per . [AUD/]

“Risk aversion and the U.S. dollar are going hand in hand,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

“Improvement has been based on less-bad statistics coming out of various parts of the world…but our view is that markets are going to remain choppy – we can’t expect an uninterrupted flow of singularly good or singularly bad news.”

The dollar edged 0.1% lower to 108.55 yen . It rose a fraction against the British pound to $1.2321 and euro () to $1.0878.

The Aussie was also knocked by ratings agency S&P downgrading the outlook on the sovereign AAA rating from stable to negative.

New York overnight reported 731 fatalities from COVID-19, the respiratory disease caused by the virus, the sharpest single-day spike, but state Governor Andrew Cuomo drew hope from an apparent levelling off in the number of hospitalisations.

Across the Atlantic, British Prime Minister Boris Johnson, who has the illness, is in intensive care for a second night although his condition is stable.

Elsewhere in Europe, Spain’s daily toll of coronavirus deaths rose for the first time in five days, but officials there and across the continent pushed forward with plans to begin lifting some lockdown measures soon.

In Asia, the dollar rose 0.5% against the Korean won and lifted from a three-week low against the – rising 0.1% to 7.0730 yuan in offshore trade . [CNY/]

Investors are keenly watching as lockdowns lift in Wuhan, China, the epicentre of the pandemic, for clues as to how the rest of the world may fare when the worst has passed.

Authorities are walking a fine line between allowing greater freedom of movement and preventing a second wave of infection, with particular concern people who show no symptoms but can still pass on the virus.

Later on Wednesday, the U.S. Federal Reserve releases minutes from its emergency meeting last month, which may include more commentary on the depth of the economic contraction that looms.

“While the virus’ curve is flattening, the economic effects of the corona crisis will linger for years,” said Commonwealth Bank of Australia currency analyst Joe Capurso.

“Economies will take time to re‑open, some businesses will not re-open, and unemployment will take years to (recover).  We think that means the dollar and yen will re-strengthen.”

Graphic: World FX rates in 2020 https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html





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It’s Back to the Future for Currencies With Volatility Like 2008 By Bloomberg


© Reuters. It’s Back to the Future for Currencies With Volatility Like 2008

(Bloomberg) — The global financial crisis may offer proper guidance on how currency volatility will play out beyond the current market turmoil, even though the two shocks are vastly different in nature.

What seems clear is that investors may need to say goodbye for the foreseeable future to the low-volatility regime in foreign exchange, with hedging throughout 2020 likely to be costly, compared to recent experience.

Long-term bets look set to turn more expensive compared to shorter-dated ones due to the uncertainty surrounding the coronavirus pandemic endgame. That pattern will be reminiscent of the collapse of Lehman Brothers, one of the most emblematic moments of the 2008 crisis.

Once again, monetary and fiscal stimulus has been unleashed in unprecedented size and power. But just as in 2008-2009, there will be fear in the market that it may not be enough to alter the longer-term outlook. Investors will be on watch for lurking credit risks and concerns over funding stresses will remain. Officials have managed to stabilize the markets — for now — yet the enhanced uncertainty creates unease on the outlook on conditions a year from now.

The abrupt shock in the currency volatility space last month resulted in record highs in euro gauges and has been followed by a deep sell-off. It’s been especially notable on options trades with an expiration date of one-week up to one-month. Comparing current volatility levels to past-year averages show that there is still more room for the short-term hedging premium to narrow compared to longer-dated plays.

Already, the so-called inverted volatility term structure in the major currencies — essentially a curve that shows hedging is currently less expensive at longer tenors — has taken a hit. That’s a sign investors are becoming less sensitive to coronavirus headlines and are shifting focus to upcoming meetings by policy makers.

Markets are more stable having priced in the immediate impact of the pandemic. They must now assess how circumstances will change when countries begin to phase out their lockdowns. The risk of a second wave of infections in autumn will probably keep implied volatility in the major currencies higher than the levels seen last year.

That helps explain bets that ranges will widen more on a yearly basis compared to a monthly one, as shown by the pound chart below.

  • NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

©2020 Bloomberg L.P.

 

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Dollar Weakens as Risk Sentiment Improves By Investing.com


© Reuters.

By Peter Nurse

Investing.com – The dollar has been on the back foot Tuesday, with risk sentiment boosted by further evidence that the virus has peaked in some countries in Europe, while the U.S. has also seen scattered evidence of improvement.

At 3:10 AM ET (0710 GMT), the , which tracks the greenback against a basket of six other currencies, stood at 100.235, down 0.5%, with the , and all rising over 1%. fell 0.3% to 108.88, while rose 0.6% to 1.0859. gained 0.7% to 1.2316 even as Prime Minister Boris Johnson was moved into intensive care overnight due to his worsening COVID-19 symptoms.

Spain’s daily death toll fell on Monday for the fourth day running to 637, its lowest level since March 24, while Italy reported 525 deaths on Sunday, the fewest since March 19 (although deaths ticked up again on Monday). In New York, the epicenter of the outbreak in the U.S., Governor Andrew Cuomo said Monday that the state’s death rate has been ‘effectively flat for the last two days.’

The euro will be in focus later as eurozone finance ministers hold a teleconference call to discuss strategies for funding the region’s policy response to the virus.  Various ideas and schemes are competing for attention, but the desire of Spain and Italy for jointly-issued and guaranteed ‘coronabonds’ is likely to be rejected by Germany, the Netherlands and others. 

The price of oil has become another factor impacting the strength of the dollar. 

“USD and oil have become an increasingly uneven relationship with US oil production now a key liability for USD,” said Danske Bank, in a research note. 

Looking at Thursday’s meeting of the major crude producers to discuss a reduction of supply, “we think risks are tilted towards a disappointment and expect to stay sub-USD40/bbl. This could fuel USD/JPY moving towards 106 again near term,” Danske added.

 By extension, “we generally also find it too early for commodity currencies to see a forceful recovery, even if NOK remains an exception due to notably its fiscal support,” Danske added.

At 3:10 AM ET, dropped 1.4% to 10.2866, while the price of Brent rose 3.1% to $34.09 a barrel.

The dollar also gave up ground against most emerging market currencies, with the rising around half a percent. 

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Pound stays on back foot as PM Johnson enters intensive care By Reuters


© Reuters.

By Stanley White

TOKYO (Reuters) – The pound edged lower against the dollar and the euro on Tuesday after British Prime Minister Boris Johnson was moved to intensive care after his coronavirus symptoms worsened.

The dollar held onto gains against the euro, the yen, and the Swiss franc as tentative signs that deaths due to the novel coronavirus in hot spots in the United States and Europe were starting to slow supported risk sentiment.

The yen was steady against major currencies after Japanese Prime Minister Shinzo Abe unveiled fiscal stimulus worth almost $1 trillion and agreed to declare a state of emergency for Tokyo and other parts of Japan to slow coronavirus infections.

Many investors are looking for signs of a peak in the coronavirus pandemic, but some analysts warn of volatility given the unpredictable nature of the previously unknown virus.

“The currency market has remained fairly calm, but there will be more downside for sterling if Johnson’s condition worsens,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“The yen will not react much to the state of the emergency, because other currencies are focused on signs that the coronavirus curve is starting to flatten out.”

The pound traded at $1.2234 on Tuesday in Asia following a 0.3% decline on Monday. Against the euro, sterling () slipped by 0.19% to 88.39 pence.

Johnson was admitted to hospital on Sunday night and had been undergoing tests after suffering persistent coronavirus symptoms, including a high temperature, for more than 10 days.

Downing Street had said he was still conscious, though his condition deteriorated in the early evening.

Britain has no formal succession plan should the prime minister become incapacitated, but Johnson has asked Foreign Secretary Dominic Raab to deputise for him.

The dollar traded at $1.0798 per euro (), holding onto six sessions of gains. Against the save-haven Swiss franc , the greenback traded near a two-week high of 0.9796.

Risk sentiment improved after the governors of New York and New Jersey pointed to tentative signs that the coronavirus outbreak in their states was starting to plateau.

The Australian dollar edged up 0.5% against its U.S. counterpart, while the New Zealand dollar rose 0.35% against the greenback as investors felt more comfortable buying currencies sensitive to risk.

The dollar fell 0.22% to 108.99 yen on Tuesday ahead of Japan’s declaration of a state of emergency.

On Monday, Japanese Prime Minister Shinzo Abe pledged to roll out an unprecedented economic stimulus, equal to 20% of economic output, as his government vowed to take “all steps” to battle the deepening fallout from the coronavirus.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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IMF Mulls Fed-Like Program to Supply Dollars to More Economies By Bloomberg


© Bloomberg. Kristalina Georgieva Photographer: Jason Alden/Bloomberg

(Bloomberg) — The International Monetary Fund may launch a new program to help address the global shortage of dollars, providing a backup to the Federal Reserve’s campaign to keep greenbacks flowing around the world economy.

IMF Managing Director Kristalina Georgieva is preparing to offer short-term dollar loans to countries that lack enough Treasuries to participate in a Fed program which enables foreign central banks to temporarily exchange U.S. debt for dollars.

The initiative has the support of the U.S. Treasury and may be launched within weeks, according to people familiar with the matter. The U.S. is the fund’s largest shareholder. The IMF is next week scheduled to hold virtual meetings of members at a time when more than 90 countries have already asked for its assistance in shielding their economies from the coronavirus and global recession.

“Our board is going to review a proposal in the next days on creating a short-term liquidity line that is exactly targeted to countries with strong fundamentals, strong macroeconomic fundamentals, that may be experiencing short-term liquidity constraints,” Georgieva said in an online briefing for reporters on Friday.

“We’re short of one instrument to provide short-term liquidity to countries that are basically strong but find themselves in a tight place,” she said, noting that Indonesia was among countries urging the IMF to look into additional ways to help with liquidity in emerging markets.

A spokesman for the IMF declined to comment, while a Treasury spokeswoman didn’t respond to a request for comment.

Dollar Rush

The coronavirus prompted a worldwide rush into dollars by wreaking havoc on a global economy that is heavily dependent on the greenback as its linchpin and relies on it as a haven at times of stress. Georgieva warned on Friday that the world recession is “way worse than the global financial crisis.”

Emerging-market borrowers who tend to rely on the IMF for aid are particularly at risk of the lack of dollars. Encouraged by low U.S. interest rates, they’ve loaded up on dollar-denominated debt in recent years. They now face a squeeze as their exports plummet, with economies shutting down worldwide to combat the pandemic.

A significantly stronger dollar can also hurt the U.S. by tightening financial conditions and making American exports more expensive on world markets.Georgieva has repeatedly touted the IMF’s readiness to deploy its $1 trillion lending capacity to fight a virus it initially failed to identify as the massive threat to global growth it now poses.

Fed Moves

The Fed has revived or introduce a series of programs aimed at supporting the international supply of dollars. Just last week it announced a temporary facility that can then be made available to companies in those countries that hold dollar-denominated debt. It had already increased the number of central banks who can borrow dollars from it on a short-term basis.

Some analysts and former fund officials have previously raised concerns about the IMF launching a traditional “swap” program and putting IMF assets at risk. In December 2017, members of the lender’s Executive Board said such a facility would “depart significantly from current fund principles and policies.”

Critics say that if the IMF provides an unsecured line of credit without conditions it risks the possibility that countries cannot repay the loan.

The IMF is probing other ways to increase its firepower. It has already asked Group of 20 leaders to support creating a sizable quantity of reserve assets called SDRs, or special drawing rights, as it did in the 2009 global financial crisis.

©2020 Bloomberg L.P.

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Dollar borrowing costs drop to lowest in decade in FX swap markets By Reuters


© Reuters. FILE PHOTO: Photo illustration of one hundred dollar notes in Seoul

By Saikat Chatterjee

LONDON (Reuters) – Dollar borrowing costs in the foreign exchange swap markets retreated further on Monday, with swap rates against the euro and pound falling to their lowest levels in more than a decade.

These moves indicate recent emergency actions by global central banks have managed to squelch a growing dollar shortage in these markets.

Costs dropped after the U.S. Federal Reserve stepped in, first renewing swap lines with major central banks, then extending similar facilities to other central banks, and finally establishing a new temporary ‘repo’ facility.

“Policies put in place to settle markets have created new distortions of their own,” Natwest market strategists said in a note. “Judging from cross-currency basis swaps, there has been a swing from an acute dollar shortage to an oversupply.”

Dollar borrowing rates via the 3-month euro-dollar FX swap fell to a 12-year low of minus 65 bps, indicating that European borrowers are able to borrow greenback at a discount. This rate had swung to a 2011 European crisis-era high of more than 150 bps two weeks earlier.

Similarly, borrowing costs against the pound in the 3-month sterling-dollar FX swap market also fell to a 12-year lows of minus 42 bps. Three-month dollar-yen swaps also also fell its lowest level in eight years at minus 30 bps, according to Refinitiv data.

However the reversal in the currency swaps market was not reflected in other corners of the derivative markets with 2008 financial crisis era indicators such as FRA-OIS spreads , still stuck near multi-year highs, partly a reflection of a broad demand for dollars among companies.

Strategists at the Bank for International Settlements, an umbrella group for the world’s central banks, said last week there is a need to ensure dollar funds remain available to firms that are enmeshed in global supply chains and in constant need of working capital.

More broadly, the reduction in dollar borrowing pressures in FX swaps did little to halt the greenback’s rise. The () was broadly firm on Monday after rising 2.5% last week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Aussie and kiwi may be past the worst, if analysts right: Reuters poll By Reuters


© Reuters. Illustration photo of Australian dollars

By Wayne Cole

SYDNEY (Reuters) – Analysts think the worst may already be over for the hard-hit Australian and New Zealand dollars and see them slowly regaining ground over the year ahead, a surprising mark of faith given the economic carnage caused by the coronavirus.

Analysts polled by Reuters see the at $0.6020 in one month, just under the $0.6055 level it was trading at on Friday.

That was a steep downgrade from the $0.6700 predicted in the last poll in February, reflecting the wild swings seen since then. Indeed, the market was so manic a poll could not be conducted properly in March.

The Aussie plunged from $0.6700 to a 17-year low of $0.5510 in a nine-day period in early March, as the spread of the virus sent global markets into a tailspin.

Now, the median forecast was for the Aussie to creep up to $0.6100 in three months, $0.6300 in six and $0.6600 on a one-year horizon.

Yet estimates ranged widely – from $0.5200 to $0.6800 on a three-month view – reflecting uncertainty on how long the economic impact of the pandemic might last.

Economists fear Australian output (GDP) could fall by 5% or more this quarter, from the first quarter, even though the Reserve Bank of Australia (RBA) cut rates to a record low of 0.25% and the government launched a massive stimulus package.

With much of the world also shut down, that is a wall of worry to climb for a commodity-leveraged currency such as the Aussie.

“Growing fears that prolonged shutdowns around the world will exacerbate the global economic contraction will keep AUD and NZD on the back foot in our view,” said Joseph Capurso, a senior currency strategist at CBA.

“We still expect AUD to fall to $0.5700, and probably lower, while NZD is heading for $0.5500, and probably lower.”

The has fared almost as badly as the Aussie in the past month, tumbling to a decade low of $0.5469 at one stage in March, before bouncing somewhat to $0.5895.

Again median forecasts suggested it was near a floor, with $0.5900 seen in one month and $0.6000 in three. Estimates ranged all the way from $0.5200 to $0.6500.

From there, analysts tipped it at $0.6100 in six months and $0.6400 on a one-year horizon.

(Polling by Sujith Pai, Indradip Ghosh and Khushboo Mittal; Editing by Jacqueline Wong)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Central European FX could begin slow rebound after virus hit: Reuters poll By Reuters


© Reuters.

By Miroslava Krufova and Jason Hovet

PRAGUE (Reuters) – Central Europe’s currencies could be over the worst of their pounding as a result of the global coronavirus pandemic, as Hungary’s forint is seen recovering from record lows and the Czech crown gradually firming in the next year, a Reuters poll showed on Friday.

The poll is the first since the pandemic worsened and since investors’ flight to safety pushed central Europe currencies into losses of 6-8% in March.

In the poll, only Romania’s leu and Serbia’s dinar – which have avoided sharp falls – were expected to depreciate over the next year. The forint, crown and Polish zloty should return back to an appreciation path, just on a weaker course.

The forint, already around record lows before the outbreak, was seen regaining 7% from Wednesday’s closing levels to 340 to the euro over the next 12 months – weaker than the 12-month median forecast of 335 a month ago.

After hitting an all-time low of 369.54 on Wednesday the forint bounced back after the central bank announced a new one-week deposit tender available to banks at its 0.9% base rate, which analysts called an implicit rate hike.

The bank said the move could reduce commercial banks’ stock of overnight deposits and manage liquidity in the market better.

“It is very hard to predict what is going to happen to the forint’s exchange rate once the pandemic is over and the economy starts to revive,” Gergely Suppan, senior economist at Magyar Takarek, said. “The new deposit tender… somewhat stabilized the forint.”

“But it is hard to predict its long-term effect,” he added.

Hungary has long had the loosest policy in the region although the other central banks are shifting heavily into easing mode to cushion the blow from the virus.

Government measures to contain the spread have limited daily life limited to essential shopping and going to work. Factories – including major car plants – have idled, shocking the region’s economies and putting them on course for declines in 2020.

The Czech central bank cut its main rate by 125 basis points, to 1.00%, in March. The bank has said it was ready to defend excessive crown moves. It holds foreign reserves equal to 60% of gross domestic product.

The poll, though, sees the crown firming 7.8% to 25.50 to the euro – where it stood before the outbreak.

Similarly, the Polish zloty () was seen rising again over the next 12 months, with the median forecast expecting a 5.8% gain to 4.35 to the euro, close to where it started March.

Romania’s leu () was seen depreciating 1.7% as the government fights to contain a swelling budget deficit – which already had investors concerned before the outbreak.

“The leu has limited space to rally after the virus-related market stress fades as old structural problems remain relevant,” Jakub Kratky, from Generali (MI:) Investments CEE, said.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Canadian dollar forecasts slashed, bracing for recession: Reuters poll By Reuters


© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar is set to remain at depressed levels over the coming months, with analysts in a Reuters poll slashing their forecasts for the currency as the coronavirus pandemic potentially pushes Canada’s economy into a deep recession.

The has plunged more than 8% since the start of the year, with much of that decline coming over the past month, as the coronavirus outbreak interrupted global economic activity and major oil producers began a price war.

Canada’s economy could be hit particularly hard because it is a major exporter of commodities, including oil, and Canadians carry record debt loads.

“Forecasting is fraught with perils right now as no one really knows how long the virus-related lockdown will last,” said George Davis, chief technical strategist at RBC Capital Markets. “We believe that the Canadian economy will enter a recession in the first half of this year.”

Davis sees second-quarter gross domestic product plunging at an annualized rate of 18% after an estimated 3% contraction for the economy in the first quarter.

The poll of over 30 currency analysts showed they expect the Canadian dollar to weaken only slightly to 1.42 per U.S. dollar, or 70.42 U.S. cents, in three months, from about 1.4175 on Thursday. In March’s poll, the 3-month forecast was 1.32.

But the loonie is then expected to rebound, with strategists forecasting 1.37 in one year.

“We are more optimistic over the longer term for the loonie,” said Hendrix Vachon, a senior economist at Desjardins.

By the summer “the recovery should be strong enough to reduce significantly the level of uncertainty and to fuel demand for currencies such as the Canadian dollar,” Vachon said.

Ottawa is rolling out more than C$200 billion in support for Canada’s economy, including direct aid to Canadians, wage subsidies for businesses, loan programs and tax deferrals, while the Bank of Canada has slashed interest rates to nearly zero and launched a large-scale asset purchase program, quantitative easing, for the first time.

Should oil prices recover, that could also support the loonie.

“Our energy analyst is expecting a decent pick-up when we look towards year-end, with a target of 50 bucks,” said Christian Lawrence, a senior market strategist at Rabobank. “That is CAD positive longer term.”

Oil has recovered some ground since Monday, when it hit an 18-year low at $19.27 a barrel, on hopes that Russia and Saudi Arabia will announce a major oil production cut.

(Polling by Sujith Pai, Indradip Ghosh and Khushboo Mittal in BENGALURU, Editing by Ross Finley and Angus MacSwan)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Yuan Weakens Past Key Support Level as Depreciation Quickens By Bloomberg


© Reuters. Yuan Weakens Past Key Support Level as Depreciation Quickens

(Bloomberg) — China’s yuan is coming under pressure after it weakened past a support level that had held for the past two weeks.

The currency fell as much as 0.41% on Thursday to depreciate past 7.125 per dollar for the first time since October, before paring losses. Analysts cited demand for greenbacks and concern over the country’s export outlook as reasons for the declines.

Sentiment is turning more bearish in China as the central bank limits stimulus and the global economy falters. Against a basket of 24 trading partner currencies, the yuan fell for seven straight days through Wednesday, while the CSI 300 Index of shares trailed MSCI Inc.’s global benchmark by the most since 2015 last week.

There are signs the central bank will seek to limit further declines. The People’s Bank of China previously set its daily fixing at stronger levels than expected when the yuan neared 7.125. Chinese banks also helped the currency strengthen by selling dollars.

“The yuan trading weaker than 7.1 indicates souring sentiment and may make the PBOC less comfortable,” said Ken Cheung, chief Asia currency strategist at Mizuho Bank Ltd. “If market forces could not guide the yuan back to near 7.1 at the market close in Asia, we may see a firmer fixing tomorrow.”

The yuan last traded down 0.1% at 7.1042.

©2020 Bloomberg L.P.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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