PBOC signals weaker yuan as USD/CNH tests resistance – BBH

FXStreet Insights Team FXStreet

The Shanghai Composite Index recovered slightly today after diving by roughly 9% on Monday. China’s state fund manager, controlled by the Ministry of Finance, confirmed it had taken action to increase its holdings of stock market index funds and promised to buy more, BBH FX analysts report.

USD/CNH faces a multi-year resistance level at 7.3800

"Moreover, the People’s Bank of China (PBOC) signaled greater tolerance for a weaker yuan. The PBOC set the USD/CNY fixing at 7.2038, the weakest since September 2023, which pushed USD/CNH higher to 7.3600. USD/CNH faces a multi-year resistance level at 7.3800."

"While a weaker yuan would increase China’s external competitiveness, it would also further curtail the role consumption plays in the economy and worsen domestic imbalances. A currency depreciation is like a tax on consumption that lowers disposable household income and reduces spending. As such, a better way for China to achieve its long-overdue investment-to-consumer pivot is via a gradual revaluation of its currency."

"This could be the basis for a grand bargain between the US and China. Devaluing USD versus CNY would hit two goals at once: help US President Donald Trump achieve his core goal to revitalize American manufacturing activity and help rebalance China’s economy away from investment towards consumption."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD remains offered below 1.1800, looks at US data

EUR/USD is still trading on the defensive in the latter part of Thursday’s session, while the US Dollar maintains its bid bias as investors now gear up for Friday’s key release of the PCE data, advanced Q4 GDP prints and flash PMIs.

GBP/USD bounces off monthly lows near 1.3430

GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3430 area, its lowest levels in the month. The move reflects a firmer Greenback, supported by another round of solid US data and a somewhat divided FOMC Minutes.

Gold drifts higher to near $5,000 on heightened US-Iran tensions

Gold price holds positive ground near $5,000 during the early Asian session on Friday. The precious metal edges higher as escalating tensions between the United States and Iran boost safe-haven demand. Traders brace for the preliminary reading of US Gross Domestic Product for the fourth quarter, the Personal Consumption Expenditures and the S&P Global Purchasing Managers Index data, which are due later on Friday.

Ethereum: Active addresses halt growth as US selling pressure eases

Ethereum network growth has declined after two months of explosive increase. US selling pressure has eased following an improvement in the Coinbase Premium Index. ETH extends its range-bound move below the $2,107 resistance and above $1,740 .

Hawkish Fed minutes and a market finding its footing

It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.

Injective token surges over 13% following the approval of the mainnet upgrade proposal

Injective price rallies over 13% on Thursday after the network confirmed the approval of its IIP-619 proposal. The green light for the mainnet upgrade has boosted traders’ sentiment, as the upgrade aims to scale Injective’s real-time Ethereum Virtual Machine architecture and enhance its capabilities to support next-generation payments.