Friday, 16 November, 2018

China's Currency Makes Round Trip as Trade War, Growth Concerns Whipsaw Market

China's Currency Makes Round Trip as Trade War, Growth Concerns Whipsaw Market China's Yuan Reverses Course, Rises Against Dollar
Laurie Berry | 06 July, 2018, 11:57

Speculation was rife China's central bank was intervening in the currency market to staunch losses and prevent a potentially destabilizing sell-off in the yuan, while stocks came off a searing sell-off in the morning.

In share trading Hong Kong sank more than three percent at one point as traders returned from a long weekend break to play catch up with the rest of Asia's retreat on Monday.

But at the end of the day, WTI is heading higher after American Petroleum Institute (API) reported another massive draw of 4.5 million barrels o for the week ending June 29 but inventories at Cushing the delivery hub for NYMEX WTI fell 2.6 million barrels.

Shanghai's bourse hit a 2-year trough though both indexes inched higher towards the close as the yuan recovered.

The Hong Kong stock market on Tuesday wrote a finish to the two-day winning streak in which it had advanced nearly 600 points or 2.1 percent.

Investors, anxious the trade row could derail a rare period of synchronized global growth, have pulled out of riskier assets in the past month or so.

"That is why we've seen Chinese yuan and Chinese stocks have suffered selloffs. Now, I think, the realization comes in that downside risk could be more significant", Rainer Michael Preiss, executive director at Taurus Wealth Advisors, told CNBC's "Capital Connection".

The head of China's central bank says he's closely watching the recent slide in the value of the yuan against the us dollar, but the country's economic fundamentals remain strong.

The PBOC was not immediately available to respond to Reuters' request for comment on the yuan's moves.

"Recently, there have been some fluctuations in the foreign exchange market".

Dozens missing after tourist boat capsizes off Thailand
Strong winds were still blowing as searchers looked for the missing off the tourist island of Phuket in the Andaman Sea. Rescue operations involving 150 personnel are ongoing for another nine people believed to be still missing.

The yuan's 3 per cent decline against the dollar over the past two weeks is largely seen as reflecting fears over a possible trade war between the world's two biggest economies.

The yuan was last traded at 6.6960 per dollar. -China trade war is heading and the extent to which Europe will become embroiled.

"The market remains supported by a production outage in Libya and the overhang from recent USA. data which suggest United States supplies are running very tight", said Stephen Innes, head of Asia-Pacific trade at OANDA.

"The big driver behind USA resilience is that tech has been strong", said Rory McPherson, head of investment strategy at asset manager Psigma.

Elsewhere in currency markets, the euro, which had been pressured by political uncertainty in Germany, pared losses after Chancellor Angela Merkel's conservatives settled a row over migration that threatened to topple her governing coalition after interior minister Horst Seehofer dropped his threat to quit.

"Since the dollar and the Swiss franc softened while the Mexican peso and some other emerging currencies gained, it may appear like a risk-on day", said Kengo Suzuki, chief forex strategist at Mizuho Securities. The central bank is considered certain to maintain rates at 1.5 per cent, where they have been since mid-2016.

Dollar trading is also expected to be range-bound as investors await the publication on Thursday of minutes from the Federal Reserve's June meeting, and Friday's U.S.jobs data.

The Aussie was steady at $0.7338 after dropping to $0.7311 overnight, its lowest since January 2017.

Shanghai stocks have tumbled into a bear market amid concern the economy will struggle to withstand rising tensions with the US.

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