News

People’s Bank of China USD/CNY reference rate is due around 0115 GMT.

The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.

How the process works:

• Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading.
• The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives.
• Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value.

China is back from a holiday Monday today

This article was written by Eamonn Sheridan at www.forexlive.com.

Bank of Japan Governor Ueda appearing at 0100 GMT/21:00EDT

• in the Japanese parliament (Diet)

Ueda and PM Ishiba

This article was written by Eamonn Sheridan at www.forexlive.com.

The Bank of Japan is expected to halt its quarterly reductions in government bond purchases starting next fiscal year, according to former board member Makoto Sakurai.

• The central bank has been trimming its bond buying by ¥400 billion every quarter since last summer, but recent pressure from rising yields has likely made further cuts too risky.
• Sakurai noted that authorities are concerned continued reductions could push yields higher, making it harder to manage the economy and government debt.

This article was written by Eamonn Sheridan at www.forexlive.com.

The Bank of Japan is being urged by market participants to either maintain or ease the pace of its bond purchase tapering beyond fiscal 2026, according to a summary of meetings the Bank held in late May with bond market players. The requests reflect growing concern over recent volatility in super-long Japanese government bond (JGB) yields and waning investor demand.

While the BOJ is currently on track to halve monthly bond purchases to ¥3 trillion by March 2026, many attendees at the meeting called for the pace to be sustained or only modestly reduced thereafter. Some suggested cutting purchases further to ¥1–2 trillion per month, while others proposed keeping the current level or even suspending reductions for super-long bonds due to poor liquidity.

The divergence in views highlights the delicate balancing act facing the BOJ, which will review its tapering strategy at the June 16–17 policy meeting. Some participants called for greater flexibility in the BOJ’s approach, especially in the super-long segment of the curve. However, others cautioned against overreacting to structural market shifts, noting that weak demand may limit the central bank’s ability to manage volatility.

Despite ending negative interest rates and initiating a gradual taper, the BOJ still holds nearly half of all outstanding JGBs, leaving it far behind global peers in winding down crisis-era stimulus.

Info via Reuters

This article was written by Eamonn Sheridan at www.forexlive.com.

The Trump administration is urging trade partners to submit their best offers by Wednesday, aiming to wrap up negotiations ahead of a looming July 8 deadline tied to its suspended “Liberation Day” tariffs.

A draft letter from the U.S. Trade Representative, seen by Reuters, outlines requests for detailed proposals on tariff and quota levels for U.S. industrial and agricultural goods, as well as plans to eliminate non-tariff barriers.

Countries are also being asked to make commitments on digital trade, economic security, and other country-specific issues. The U.S. plans to quickly assess the responses and propose a “landing zone” that could include reciprocal tariff rates.

The urgency reflects the administration’s desire to close out complex, multi-country negotiations launched on April 9, when President Trump paused his sweeping tariffs for 90 days following turmoil in financial markets. Despite repeated White House claims that deals were close, only one has been outlined, just a limited framework with the UK.

The letter appears directed at nations with ongoing talks, including the EU, Japan, Vietnam, and India.

This article was written by Eamonn Sheridan at www.forexlive.com.