China's top legislative body approves bill to raise local government debt ceilings

Dhwani Mehta FXStreet

China's Vice chairman of the National People's Congress (NPC) Financial and Economic Affairs Committee announced on Friday that Beijing approved a bill to raise local government debt ceilings to replace existing hidden debts.

Key takeaways

China plans to raise local govt debt ceiling by 6 trln yuan.

New debt quota will help replace existing debt.

Move to swap hidden debt will help resolve local debt risks.

NPC approved plans to increase local debt ceiling.

Will speed up overhaul of local govt financing vehicles to curb new debt.

Arranging 6 trln yuan in local govt debt quota to resolve 'hidden' debt is a major policy decision.

2 trln yuan will be used for debt swap each year.

China's 'hidden' local govt debt at 14.3 trln yuan at end-2023.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold at the mercy of bears; focus is on $4,250

Gold adds to Monday’s pessimism, struggling to extend the daily move above the $4,300 region per troy ounce and trading with modest losses on Tuesday. The precious metal’s extra weakness follows another positive day in the US Dollar, mixed US Treasury yields and steady pre-Fed caution.

Ripple, Cardano, Hyperliquid – Easing bullish momentum sparks downside risks

Top altcoins, including Ripple (XRP), Cardano (ADA), and Hyperliquid (HYPE), are trading in the red on Tuesday, with roughly 2% losses so far. The altcoins are facing downside pressure ahead of the CLARITY Act cloture vote scheduled for Tuesday.

Markets slide as FOMC approaches

The US Dollar remains strong as markets turn increasingly cautious ahead of the FOMC. Stocks are tumbling, while Gold and Silver are moving lower under pressure from the stronger Dollar. The Japanese Yen is weaker again, while Crypto is correcting. BTC is approaching a key technical test and could fall below its 50-week moving average, while ETH remains above $2,405.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.