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Daily Currencies Ratings

China yuan’s global FX reserve footprint smallest in 3 years: McGeever

Far from cementing itself as a world reserve currency, China’s yuan has gone into reverse and its share of global foreign exchange reserves has fallen to the lowest level in three years. The gradual but steady decline since early 2022 reflects the international community’s unease about investing in China, which was crystallized in huge foreign capital outflows from Chinese equity and bond markets last year. While China’s economy finally seems to be emerging from its post-lockdown funk in the wake of COVID-19, there are plenty of reasons reserve managers may ...

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Dollar jumps on central bank divergence, euro hits five-month low

The euro stumbled to a five-month low against the dollar on Friday after the European Central Bank indicated it could soon cut rates, a divergence from market expectations for the U.S. Federal Reserve to keep rates higher until later in the year. The broad strength in the dollar also sent the Japanese yen to a 34-year low as investors looked for signs of a possible intervention from central bank officials. Recent U.S. economic data on the labor market and inflation have caused market expectations for a rate cut from the ...

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FX Daily: From Fed dependence to Fed divergence

USD: Stronger backing from other central banks At the start of this week, the dollar looked cheap, but we thought it would have taken something on the US side or in other key developed markets for it to realign with its strong rate profile. Come Friday, both the US and rest of the world’s story have turned more positive for the greenback. The hot US CPI was the trigger to a substantial dollar rally, but the dovish (even if moderate) shift in the European Central Bank and the Bank of ...

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Yen struggles against resurgent dollar and US Treasury yields

The yen struggled to break away from a 34-year low on Friday and was headed for a weekly decline, while the dollar hovered near a five-month high alongside U.S. Treasury yields as traders heavily scaled back bets for a slew of U.S. rate cuts this year. The euro EUR=EBS was eyeing its sharpest weekly fall in about four months, pressured in part by a resurgent greenback and expectations the European Central Bank (ECB) could begin easing rates in June, likely ahead of the Federal Reserve. The yen was last marginally ...

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IMF’s Georgieva: China should boost domestic demand, shift toward services

IMF Managing Director KristalinaGeorgieva said on Thursday that China needs to boost domestic demand and shift more of its economy toward services to reduce problems caused by excess manufacturing capacity in certain sectors. Georgieva told an Atlantic Council event in Washington that China could step upits economic output by 20% in the coming years if it follows the reform advice of the International Monetary Fund. “We recognize there have been sectors in the Chinese economy over the years where overcapacity has existed,” Georgieva said. “It is critical to develop domestic ...

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Pound falls to lowest since December as dollar stays strong

The pound dropped to a four-month low against the dollar on Thursday, still under pressure after the higher-than-expected U.S. inflation print the day before, but gained on the euro which was soft after the European Central Bank meeting. The pound was down 0.17% on the dollar at $1.2516, its lowest since mid December, extending falls after a 1.1% drop the day before, its biggest one day fall since October. That decline came after U.S. inflation which was hotter than expected, and caused markets to push back expectations of the first ...

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China sets yuan fixing with strongest upward bias since 2018

China’s central bank ramped up support for the yuan in its daily guidance on Thursday after an overnight surge in the U.S. dollar put authorities on alert for sharp declines in the local currency. The People’s Bank of China set the midpoint rate for the yuan CNY=PBOC at 7.0968 per U.S. dollar prior to market open on Thursday, 1,654 pips firmer than a Reuters estimate, the biggest discrepancy since Reuters started its estimations in 2018. The record discrepancy comes after the offshore yuan CNH=D3 dropped the most in three weeks ...

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Why is the Japanese yen so weak?

Japan’s yen is at three-decade lows and under enough pressure to prompt strong official warnings of intervention to prop it up. The yen has fallen despite Japan’s first interest rate hike since 2007 and optimism about the economy. It traded at 153.24 per dollar on April 10, its weakest since 1990 and in real terms it is at its weakest since at least the 1970s. A weaker yen is a boon for Japanese exporters’ profits, and for tourists visiting Japan who find their currencies going further, but it squeezes households ...

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Weak yen may actually deter Bank of Japan from hiking rates soon

The yen’s fresh slide to a 34-year low complicates the Bank of Japan’s deliberations on the timing of a next interest rate hike, as a resulting rise in import costs pushes up inflation but also hurts already weak consumption and the broader economy. If that weakness persists and discourages small firms from hiking pay, the central bank may prefer to wait at least until autumn before hiking, say five government officials and sources familiar with its thinking. The BOJ is seen raising this year’s price forecast at the next meeting ...

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FX Daily: Dollar bulls take control

USD: CPI delivers stronger dollar and tighter financial conditions Yesterday’s release of the March US CPI data continued the run of strong/above consensus US inflation and activity data. Last week, we were talking about the dollar being at the crossroads given that the market was pricing 75bp of 2024 easing – the same as the Fed median Dot Plot. Well, those high CPI figures have now seen the market take a decisive turn in favour of the stronger-for-longer camp. And Fed easing expectations have been pared back to just 42bp ...

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Dollar firms, yen fragile as Fed cut wagers crumble

The dollar was firm on Thursday after hotter-than-expected U.S. inflation data squashed lingering expectations of the Fed starting its rate-cutting cycle in June, while the yen languished at the levels last seen in the middle of 1990. Investor focus will now be on U.S. producer price data and the European Central Bank’s policy meeting later in the day. The yen’s slide to a 34-year low of 153.24 per U.S. dollar on Wednesday brought intervention fears back as authorities in Tokyo reiterated that they would not rule out any steps to ...

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US dollar surges vs yen to highest since mid-1990 after hotter-than-expected inflation data

The dollar rose across the board on Wednesday, soaring against the Japanese yen to its highest since mid-1990, after U.S. inflation rose more than expected in March, pushing out the expected timing of a first rate cut to September from June. Market participants are also on the alert for any signs of intervention from the Japanese authorities to boost the yen. The big move in the yen came after data showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected ...

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FX Daily: CPI time

USD: Will CPI continue to thwart Fed dovishness? US CPI data is the biggest piece of market-moving data each month. Perhaps that is no surprise given the pandemic, the Ukraine war inflation shock and, thankfully, strong signs of disinflation which emerged globally through the second half of 2023. For the Federal Reserve, sticky inflation has proved a thorn in its side. Chair Jerome Powell sounds like he would love for the Fed to cut rates and fulfil the dual mandate of 2% inflation and maximum employment. The bumpy road to ...

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Dollar firms ahead of US inflation data, yen keeps traders on alert

The dollar edged higher on Wednesday ahead of a key inflation report later in the day, while the yen remained near multi-decade lows, keeping traders on alert for signs Japanese authorities could intervene to prop up the currency. The main market focus on Wednesday is U.S. consumer price inflation for March due at 1230 GMT, which traders have been eagerly awaiting for hints on the Federal Reserve’s policy outlook. The inflation data follows a strong jobs report last Friday that blew past forecasts, raising questions on how soon and how ...

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US dollar flat to slightly lower ahead of inflation data; yen still in focus

The dollar was little changed on Tuesday, trading in narrow ranges, with investors cautious ahead of U.S. inflation data, even as the yen hovered near multi-decade lows, keeping traders on alert for any possible action from Japan to prop up its currency. Economists expect the headline consumer price index (CPI) to have risen 0.3 on a monthly basis, compared with 0.4% in February, according to a Reuters poll. Core CPI is also expected to rise 0.3% for the month of March. Ahead of the CPI data due on Wednesday, the ...

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