The sources say that China’s major state-owned banks were seen buying dollars in the onshore market this week and held on to them in what a not so typical situation in the Chinese market. The dollar buying comes as state banks tried to smooth out the surging rise of the yuan currency.
However, this time around lenders did not appear to recycle the dollars into the swap market. For some context, this helps to keep dollar liquidity tighter and indirectly raise the cost of long yuan positions.
One of the sources noted that the moves here are directed to moderate the pace of yuan gains, not so much so to reverse the recent uptrend against the dollar.
So far this year, the yuan is up over 3% against the dollar year-to-date and that will mark the biggest yearly jump in the currency against the greenback since 2020. USD/CNY took out the floor of 7.10 last week and nearly touched 7.06 this week before a slight bounce today to 7.07, still keeping at its weakest levels since October last year.
This article was written by Justin Low at investinglive.com.
Ouch, that’s a bummer. The drop in November marks the steepest downturn in UK construction
output for five-and-a-half years, with all three subsectors seeing the greatest
fall in activity since May 2020. That comes amid a sharp reduction in both new orders and employment. Meanwhile, business optimism also sank to its weakest since December 2022. S&P Global notes that:
“November data revealed a sharp retrenchment across
the UK construction sector as weak client confidence
and a shortfall of new project starts again weighed on
activity.
“Total industry activity decreased to the greatest
extent for five-and-a-half years, led by steep falls in
infrastructure and residential building work. Commercial
construction also faced severe headwinds during
November as business uncertainty in the run up to the
Budget pushed clients to defer investment decisions.
“Lower workloads, alongside pressure on margins from
rising wages and purchasing costs, continued to dampen
staff hiring in November. The latest round of job cuts was
the most marked since August 2020.”
“Construction companies also signalled a slide in
business activity expectations for the year ahead as
hopes of an imminent rebound in sales pipelines faded
in November. The degree of optimism dropped to its
lowest since December 2022 amid reports of cutbacks to
client budgets and pervasive worries about long-term UK
economic growth prospects.”
This article was written by Justin Low at investinglive.com.
It’s a relatively quiet start to the session with not much for traders and investors to work with. The overall risk mood remains more muted, even if European indices are posting modest gains to follow up the steady showing from yesterday. US futures are flat, so that’s not providing much direction on risk appetite.
As such, major currencies are mostly caught in a bind with the dollar at least keeping steadier after a softer showing to start December. The only notable mover on the day is USD/JPY, which is just down 0.2% but starting to trickle below the 155.00 mark as mentioned earlier here.
Besides that, there is not much appetite across other major currencies with EUR/USD locked in by large option expiries while other major currencies are keeping only within 15 pips change of the dollar currently.
At the balance, the dollar is still keeping more vulnerable on the week but the slow bleeding has at least stopped for now.
The key risk events later in the day will be from US data with the Challenger job cuts and weekly initial jobless claims on the agenda. As a reminder, there will be no non-farm payrolls report this week.
This article was written by Justin Low at investinglive.com.
The GBP/USD pair advanced decisively to 1.3338, marking its highest level since late October. Sterling found support from an upward revision of the UK’s November Services PMI, while the US dollar remained under broad pressure ahead of an anticipated Federal Reserve rate cut next week. The UK Services PMI rose to 51.3 from a preliminary […]
The post GBP/USD Extends Gains as Interest Rate Divergence Captures Focus appeared first on ActionForex.
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