CNY: Flat for the week - BBH

Sandeep Kanihama FXStreet Contributor

Analysts at BBH note that the Chinese yuan is flat this week and after aggressive rhetoric about naming China as a currency manipulator and the feint of recognizing Taiwan, the Trump Administration has changed tactics.

Key Quotes

“It has endorsed the one-China policy, and Treasury Secretary Mnuchin indicated that no judgment would be made until the semiannual FX report is made in April. Under the current criteria, by intervening to strengthen rather than weaken the yuan, China is not a currency manipulator. There is talk of an effort to take a different approach; one that focuses on valuation rather than manipulation.”

“Even on this measure, it is hard to say that the yuan is out of line. Investors seem to recognize this, and when coupled with elevated capital controls, the downside pressure on the yuan appears to have eased. Here the tell may not be the spot rate so much as the 12-month forward rate, where the points have steadily fallen over the last four weeks, the longest decline in eight months. Also, the 12-month implied volatility has eased to nearly 6%, the lowest since the end of 2015.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.