Forex: Optimism Ahead of US-China Trade Talks Cap USD, Support RMB Yuan
In New York Wednesday
- US Dollar (.DXY) Index finished down 0.5% at 94.75, approaching its August low (94.43). The Buck saw some slight strength in overnight trade, but a slide to lows took place after the release of a cooler than expected PPI for August (actual -0.1% consensus 0.2%). .DXY extended its decline in mid-morning trade after the WS-J reported that a group of senior US officials, led by Treasury Secretary Steven Mnuchin, reached out to their Chinese counterparts to resume trade talks. The report gave a boost to offshore RMB Yuan, placing the Chinese currency at 6.831 near its 50-Day MA at 6.807.
- USD/CNY: -0.19% to 6.857
- China’s August New Loans CNY1.28-T (expected CNY1.30-T; last CNY1.45-T). August M2 Money Stock +8.2% Y-Y (expected 8.5%; last 8.5%). August Outstanding Loan Growth +13.2% Y-Y as expected (last 13.2%)
The USD was firmly capped, while the Chinese RMB Yuan advanced Thursday after news that Washington was seeking a new round of trade talks with Beijing reduced safe-haven demand for the US currency.
EUR and GBP held steady ahead of policy decisions by the European Central Bank and the Bank of England scheduled later Thursday.
The .DXY Vs a basket of 6 major currencies was little changed at 94.795 .DXY after declining about 0.5% Wednesday.
The Buck fell following news that The Trump Administration has invited Chinese officials to restart trade talks.
The USD dipped on the latest trade-related headline, but it is hard to imagine the situation improving dramatically on this meeting alone. Currencies will continue reacting to each bit of news about the US-China trade dispute.
We here at HeffX-LTN expect China to align with the US trade policies.