USD/CNH: A sudden weakness amid USD strength – DBS

FXStreet Insights Team FXStreet

China cut the 1Y and 5Y LPR by 25bps on Monday to 3.10% and 3.60% respectively. USD/CNH had surged to mid-7.13 levels amid broad USD strength, DBS’ FX analyst Philip Wee notes.

RMB market mood shifts amid a resurgent Trump

“China cut the 1Y and 5Y LPR by 25bps on Monday to 3.10% and 3.60% respectively. These cuts to benchmark lending rates were expected given a 20bps cut to the 7D reverse repo rate in late September, and are part of a broader policy push to stimulate growth in China.”

“USD/CNH had surged to mid-7.13 levels amid broad USD strength, opening a gap with the onshore CNY fixing. RMB flows have become more two-way, after an earlier bout of equity inflows into China briefly led to a dip in USD/CNH below 7.”

“We had flagged US election and trade risks as reasons to be restrained on RMB optimism earlier, and it seems the RMB market mood has indeed shifted amid a resurgent Trump.”

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.

AUD/USD hits nine-week lows below 0.7000 on RBA Bullock's remarks

AUD/USD reverses a brief uptick and turns lower to hit nine-week lows below 0.7000 in the European morning on Tuesday, as traders digest cautious remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock during the press conference. Earlier on, the RBA raised the cash rate to 4.60%, as widely expected, leaving the door open to further rate hikes if needed.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around 157.50 in the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting the pair.

Gold regains some traction; focus remains on $4,100

Gold manages to gather some composure and bounces off recent lows near the key $4,100 mark per troy ounce on Tuesday. The move higher in the precious metal comes despite the firmer US Dollar and rising US Treasury yields across the board, while escalating geopolitical tensions appear to limit the downside potential.