11 Aug 2015
AUD hammered on Yuan fix, JPY dominates on risk-off
FXStreet (Bali) - The PBOC decided to lower the RMB ‘fix’ by the most on record today (-1.9%), and while arguing this is a ‘one-off adjustment’, the offshore yuan (CNH) is trading at a discount against the CNY, strengthening the notion that there might be further room to depreciate from here.
USD, JPY main beneficiaries
The US Dollar is higher across the board, with only the Japanese Yen being able to master more gains since the news hit the wires, as a risk-off profile settles in across Asia, with the Nikkei 225 down by over 0.25%, the Shanghai Composite in China is down 0.35%, while the 30-yr Treasury bonds have spiked higher.
Double whammy for the AUD
The depreciation in the Yuan exchange rate has negative repercussion for the Australian economy, as Chinese companies purchasing products out of 'Down Under' will have less purchasing power. On top of that, the PBOC decision to send the Yuan lower sends a 'warning' message to markets, as it suggests the Chinese economy goes through a tough time to maintain desired growth.
USD, JPY main beneficiaries
The US Dollar is higher across the board, with only the Japanese Yen being able to master more gains since the news hit the wires, as a risk-off profile settles in across Asia, with the Nikkei 225 down by over 0.25%, the Shanghai Composite in China is down 0.35%, while the 30-yr Treasury bonds have spiked higher.
Double whammy for the AUD
The depreciation in the Yuan exchange rate has negative repercussion for the Australian economy, as Chinese companies purchasing products out of 'Down Under' will have less purchasing power. On top of that, the PBOC decision to send the Yuan lower sends a 'warning' message to markets, as it suggests the Chinese economy goes through a tough time to maintain desired growth.