Chinese yuan hits perennial lows
Chinese yuan hits perennial lows
Written by: PaxForex analytics dept - Monday, 05 August 2019 0 comments
The Chinese yuan fell by more than 1% to an 11-year low on Monday amid growing concerns about a sharp escalation of the US-Chinese trade war, which caused sales of other currencies in the region.
Growing concerns about global trade led investors to rush to safe-haven assets, while the Japanese yen rose to a seven-month high against the dollar.
Yuan unexpectedly broke the mark of 7 per dollar for the first time after the global financial crisis, a level that some market players consider to be the main support. Offshore yuan fell to a mark of 7.1137 per dollar.
The strongest decline in Chinese currency occurred only a few days after US President Donald Trump surprised the markets, saying that he intends to introduce additional tariffs on Chinese imports. Large investors are inclined to believe that this may be the most important point for the yuan this year.
The sharp drop occurred after Beijing vowed to resist Trump’s sharp decision to establish a 10% tariff for the remaining $ 300 billion in Chinese imports, which ended the monthly trade truce. The decline of the yuan has negatively affected many currencies in the region.
The Australian dollar, often used as an additional indicator of China's trade, fell by 0.35% to $ 0.6773, reaching a seven-month low of $ 0.6748.
The currencies of emerging market countries received an even deeper blow.
The Korean won fell by 1%, reaching a three-year low of 1,218.3 per dollar, while the new Taiwan dollar fell by more than 0.7% to a two-month low of 31.627. The Mexican peso fell by 1% to 19,507 against the USD, and the Indian rupee in the minus by 1.2% to 70.425.
The American dollar is negative against traditional safe-haven currencies. USD fell to a mark of 105, 80, the weakest indicator since January of this year. Gold reached a six-year high of $ 1,456.2 per ounce.
The yield on 10-year US Treasury bonds in Asia fell by 7.5 basis points to 1.780%, exceeding a drop of 23 basis points last week, the biggest weekly decline in seven years.
Fed futures are currently estimated at 0.75 basis points with some probability of decline.
Forex calendar >
Forex trading recommendations:
GBPUSD: Buy. Entry point – 1, 2112. Take profit – 1, 2145. Stop Loss – 1, 2056.
NZDUSD: Buy. Entry point– 0, 6522. Take Profit – 0, 6538. Stop Loss – 0, 6495.
USDCAD: Sell. Entry point – 1, 3231. Take Profit – 1, 3215. Stop Loss – 1, 3258.
Growing concerns about global trade led investors to rush to safe-haven assets, while the Japanese yen rose to a seven-month high against the dollar.
Yuan unexpectedly broke the mark of 7 per dollar for the first time after the global financial crisis, a level that some market players consider to be the main support. Offshore yuan fell to a mark of 7.1137 per dollar.
The strongest decline in Chinese currency occurred only a few days after US President Donald Trump surprised the markets, saying that he intends to introduce additional tariffs on Chinese imports. Large investors are inclined to believe that this may be the most important point for the yuan this year.
The sharp drop occurred after Beijing vowed to resist Trump’s sharp decision to establish a 10% tariff for the remaining $ 300 billion in Chinese imports, which ended the monthly trade truce. The decline of the yuan has negatively affected many currencies in the region.
The Australian dollar, often used as an additional indicator of China's trade, fell by 0.35% to $ 0.6773, reaching a seven-month low of $ 0.6748.
The currencies of emerging market countries received an even deeper blow.
The Korean won fell by 1%, reaching a three-year low of 1,218.3 per dollar, while the new Taiwan dollar fell by more than 0.7% to a two-month low of 31.627. The Mexican peso fell by 1% to 19,507 against the USD, and the Indian rupee in the minus by 1.2% to 70.425.
The American dollar is negative against traditional safe-haven currencies. USD fell to a mark of 105, 80, the weakest indicator since January of this year. Gold reached a six-year high of $ 1,456.2 per ounce.
The yield on 10-year US Treasury bonds in Asia fell by 7.5 basis points to 1.780%, exceeding a drop of 23 basis points last week, the biggest weekly decline in seven years.
Fed futures are currently estimated at 0.75 basis points with some probability of decline.
Forex calendar >
Forex trading recommendations:
GBPUSD: Buy. Entry point – 1, 2112. Take profit – 1, 2145. Stop Loss – 1, 2056.
NZDUSD: Buy. Entry point– 0, 6522. Take Profit – 0, 6538. Stop Loss – 0, 6495.
USDCAD: Sell. Entry point – 1, 3231. Take Profit – 1, 3215. Stop Loss – 1, 3258.