China’s yuan fell to a two-year low, money-market rates dropped and most stocks advanced after the central bank cut benchmark borrowing costs for the second time in three months amid an economic slowdown.
The currency retreated as much as 0.06 percent in Shanghai and a gauge of interbank funding availability declined the most in more than a month. The benchmark Shanghai Composite index climbed, with about two stocks rising for each that fell. Most economists predict Premier Li Keqiang will announce a 2015 growth target of around 7 percent, down from 7.5 percent last year, when the National People’s Congress convenes its annual meeting this week.
“It’s pretty clear a rate cut is negative for the currency,” Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong, said in a March 1 phone interview. “Stimulating the economy has taken precedence over stabilizing the currency. They’ll allow more depreciation, and it makes sense because the dollar is so strong.”
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.