Forex – Sterling Slips vs Dollar, Euro as Vlieghe Fuels Rate Hopes

© Reuters.  © Reuters.

Investing.com — The dollar opened the week stronger against the and the Japanese , but weaker against the euro, with markets still unsettled by the weak labor market report on Friday.

The , which measures the greenback against a basket of currencies, was effectively unchanged at 3:10 AM ET (0810 GMT) at 97.130. However, that masked a 0.5% rise for the dollar against sterling, which continued to suffer from speculation on an interest rate cut from the Bank of England. The was up marginally at $ 1.1128.

Speeches by Governor Mark Carney and Monetary Policy Committee member Silvana Tenreyro last week had encouraged hopes of a cut. Over the weekend, another MPC member Gertjan Vlieghe, had signalled in an interview with the Financial Times that he would also back a rate cut barring “an imminent and significant improvement in the U.K. data.”

Vlieghe will get his chance to judge on that at 4:30 AM ET (0930 GMT) with the latest update on and its components, along with data for November. The National Institute of Economic and Social Research publishes its later at 9 AM ET (1400 GMT).

“Sterling seems to be caught between the bid from the under-weight asset managers and some speculators seeing the Brexit uncertainty lifted on the one hand, and the under-appreciated risks of a rate cut and a no-deal Brexit still on the other,” said Marc Chandler, managing partner of Bannockburn Global Forex. He sees a near-term range of $ 1.2900-$ 1.3200 for Cable.

The continued unrest in Iran over the weekend appears to have had little impact on broader sentiment, which is firmly in risk-on mode as the risk of war with the U.S. recedes and the signing of the preliminary trade agreement between China and the U.S. – scheduled for Wednesday – draws nearer.

The broke through 6.90 to the dollar for the first time in five months overnight, while the rose to a 20-month high. The dollar also continued to lose ground against other barometers of risk appetite such as the Indonesian and Turkish .

Analysts at Nordea pointed to the incongruity of sharply rising emerging market currencies, given the consistently weak numbers coming out of global purchasing manager indexes.

“Either EM FX and equities are too expensive or else the global manufacturing PMI is about to explode higher. It is do or die time,” analysts Andrea Steno Larsen and Martin Enlund said. “It’s very hard to find a trigger for a weakening market at present (outside of Iran maybe) but maybe that is a worrying sign in itself?”

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Forget Rate Decisions. Loonie Traders Bank on Canada Immigration

© Reuters.  Forget Rate Decisions. Loonie Traders Bank on Canada Immigration © Reuters. Forget Rate Decisions. Loonie Traders Bank on Canada Immigration

(Bloomberg) — In an era of low global interest rates, currency traders will have to look elsewhere for an impetus. In Canada, they can bank on population growth.

The flood of immigrants and non-permanent residents to levels not seen in a century has been one of the main drivers supporting Canada’s economic expansion over the past several years. That has kept the Bank of Canada as an outlier in the global easing trend as it held its policy rate unchanged, bolstering the allure of the loonie.

“These high levels of immigration — if they are to continue and help support growth — are actually supportive of a Canadian dollar over time,” Frances Donald, chief economist at Manulife Investment Management, said in an interview in Toronto.

The country’s population grew by 208,234 in the July to September period, or 0.6%, the fastest quarterly increase since at least 1971. Some 83% of that increase is due to international migration, according to estimates from Statistics Canada released Thursday in Ottawa. Over the past year, Canada’s population has jumped by almost 560,000, an increase of 1.5% — that’s the fastest annual pace since 1990.

“This is the story I think markets are missing: how powerful immigration is at actually changing your financial markets, particularly your rates and FX,” Donald said.

The is on pace to take the No. 1 spot among its Group-of-10 counterparts this year, strengthening by about 4% against the U.S. dollar.

Canada’s population boom has driven robust gains in the housing and labor markets, countering the effect of an aging demographic. This has helped to avoid the Japanification trap of low growth, low inflation and low interest rates that are slowly becoming evident in other parts of the world.

“What’s fascinating about the story however, from a strategist, like myself, is not even how it relates to GDP growth but how we’re substituting one form of policy for another,” Donald said.

While Donald argues immigration can be a proxy for monetary policy, currency strategists say the central bank is still the main driver of the loonie, and immigration is more of a long-term variable that can influence policy.

“Immigration informs the output gap and hence policy stance,” wrote Mazen Issa, senior FX strategist at TD Securities in New York. “FX will react to how the Bank changes policy.”

Case in point, Bank of Canada Governor Stephen Poloz has cited the country’s robust labor force, supported by new entrants, as a reason for holding interest rates despite concerns around a slowdown.

Relying on human capital to improve growth and inflation numbers over time actually acts as a curve steepener, Donald added. “If we rely on this so called human stimulus then we don’t have to rely on monetary policy to the same extent.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Indonesia Cuts Key Rate Again, Says Future Moves Depend on Data

© Reuters.  Indonesia Cuts Key Rate Again, Says Future Moves Depend on Data © Reuters. Indonesia Cuts Key Rate Again, Says Future Moves Depend on Data

(Bloomberg) — Indonesia’s central bank cut its for a fourth straight month amid a deteriorating outlook for global growth, saying any further moves would depend on incoming economic data.

Bank Indonesia lowered the seven-day reverse repurchase rate by 25 basis points to 5% Thursday, as predicted by 23 out of 30 economists surveyed by Bloomberg. The rest had forecast no change.

“The decision is in line with an inflation estimate that remains under control and investment yields that remain attractive, also as a pre-emptive step to push the domestic economy amid a slowing global economy,” Governor Perry Warjiyo told reporters in Jakarta.

While the bank’s policy stance remains generally accommodative, its future course will “be data dependent from one month to another,” he said.

Thursday’s easing comes after the International Monetary Fund revised down its forecast for global growth and cut its 2019 projection for Indonesia to 5% from 5.2% in July. Despite signs of an impending deal between the U.S. and China, the trade war between the two behemoths is continuing to weigh on Indonesia’s economy, which grew at its slowest pace in two years in the second quarter.

Supporting Growth

“The move to cut rates again is aimed at supporting the growth momentum in the face of slowing retail sales, falling automotive sales and sluggish investment,” said Josua Pardede, an economist at PT Bank Permata in Jakarta. “Depending on GDP growth in the third quarter of this year, we think the room for another BI policy rate cut is still open in the following months.”

Bank Indonesia raised interest rates by 175 basis points last year as it battled an emerging-market rout that was pressuring Indonesia’s currency, but this year its focus has shifted to supporting growth.

The was up 1% as of 3:12 p.m. local time, but didn’t move much on the decision. The , which has gained 2.5% against the dollar this year, fell 0.1% to 14,045 per dollar after the decision. Yields on 10-year government bonds pared an earlier drop and were little changed on the day at 7.08%.

Gareth Leather, a senior Asia economist at Capital Economics, said the likelihood of rising global risk aversion — which could scare investors away from emerging-market currencies like the rupiah — might limit Bank Indonesia’s options going forward.

“Given Indonesia’s high level of foreign currency debt, we doubt the central bank would want to cut aggressively” in such a scenario, Leather said.

Forecasts Stable

Indonesian policy makers remain comfortable with a relatively subdued inflation environment that has allowed them to lower borrowing costs since July. Consumer prices rose 3.39% in September from a year ago, well within Bank Indonesia’s target band of 2.5%-4.5% for this year.

The bank kept its economic forecasts broadly unchanged from last month:

  • Gross domestic product growth is seen below the midpoint of the 5%-5.4% forecast range, and is set to move toward the midpoint of a 5.1%-5.5% range for 2020
  • Inflation this year will likely come in below the midpoint of the 2.5%-4.5% target range, and stay within the 2%-4% range in 2020
  • The current-account deficit should be around 2.5%-3% of GDP this year and next

“BI’s rate cut today was no surprise given the combination of sluggish growth, benign inflation and a reasonably stable” rupiah, said Krystal Tan, an economist at Australia & New Zealand Banking Group Ltd. in Singapore. “As long as external stability is maintained, the bias is probably toward a deeper easing cycle.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Narrow majority of Fed banks wanted to keep discount rate unchanged: minutes

WASHINGTON (Reuters) – Seven out of the 12 regional Federal Reserve banks wanted to leave unchanged the rate commercial banks are charged for emergency loans ahead of the U.S. central bank’s last policy meeting, minutes from the discussion of the discount rate showed on Tuesday.

Despite that, the Fed decided to lower the discount rate to 2.50% from 2.75% at its Sept. 17-18 meeting at the same time that it cut its benchmark overnight lending rate by a quarter of a percentage point to a target range of between 1.75% and 2.00%.

Directors of the Fed banks of Boston, New York, Philadelphia, Richmond, Cleveland, Atlanta and Kansas City all wished to maintain the existing discount rate, citing a “strong labor market and inflation near its symmetric 2% objective.”

The directors of the Fed banks of Minneapolis, Chicago, Dallas and San Francisco pushed for the quarter-percentage-point cut in the discount rate that was ultimately implemented.

The discord echoes the debate among U.S. central bank policymakers about how much slowing global growth and the fallout from the Trump administration’s trade wars are harming the U.S. economy.

Policymakers are split into those who think the Fed’s two interest rate cuts this year suffice for now to keep the longest economic expansion on record going, others who think the Fed should lower borrowing costs more, and some who see a rate rise by the end of the year, according to projections released last month.

St. Louis Fed President James Bullard called for a half-percentage-point cut at the Fed’s September policy meeting. Directors of the St. Louis Fed likewise wanted the discount rate cut to 2.25% ahead of the meeting, the minutes showed.

Investors currently expect another reduction in borrowing costs when the Fed’s rate-setting committee next meets at the end of this month.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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India Cuts Key Rate for Fifth Time as It Lowers GDP Forecast

© Reuters.  India Cuts Key Rate for Fifth Time as It Lowers GDP Forecast © Reuters. India Cuts Key Rate for Fifth Time as It Lowers GDP Forecast

(Bloomberg) — India’s central bank cut its key interest rate for a fifth straight time this year, moving aggressively to revive economic growth as the banking system faces new stresses.

The Reserve Bank of India lowered its benchmark repurchase rate by 25 basis points to 5.15% on Friday. A majority of the 39 economists in a Bloomberg survey predicted the move, while the rest forecast cuts ranging from 15 basis points to 40 basis points.

“There is policy space to address these growth concerns by reinvigorating domestic demand,” the central bank said in a statement. The Monetary Policy Committee “decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.”

All members of the six-member Monetary Policy Committee voted for a rate cut. One member voted for a 40 basis point cut, while the others opted for a quarter-point easing. The RBI retained its accommodative policy stance.

Governor Shaktikanta Das last month alluded to the chance of more easing, given concerns about economic growth. The RBI on Friday lowered its full-year growth forecast for a fourth time to 6.1% from 6.9% previously.

The benchmark stock index and the rupee pared gains after the decision, while India’s 10-year bonds fell.

Central banks around the world are loosening monetary policy to offset a global slowdown made worse by U.S.-China trade tensions. Australia cut rates earlier this week for the third time this year, while the Philippines and Indonesia eased policy last month.

Gross domestic product rose 5% in the quarter ended June, the weakest pace in six years, and leading indicators tracked by Bloomberg News suggest fairly subdued investment and consumption activity in August.

Friday’s cut takes the benchmark rate to the lowest in almost a decade and follows a number of fiscal steps taken by the government recently to spur growth, including a surprise $ 20 billion reduction in corporate taxes.

“While the recent measures announced by the government are likely to help strengthen private consumption and spur private investment activity, the continuing slowdown warrants intensified efforts to restore the growth momentum,” the central bank said.

The cut takes the cumulative easing so far this year to 135 basis points, prompting economists to question how much more easing room the RBI has.

The RBI is also facing mounting problems in the banking system, which could further hurt lending in the economy. It recently imposed withdrawal curbs on a small bank and lending restrictions on another lender. Addressing some of those worries, the RBI said earlier this week the banking system was “safe and stable.”

The central bank raised its near-term inflation forecast slightly to 3.4% for the second quarter of the fiscal year started April, while projecting the headline number to continue to stay below its medium-term target of 4% — a level it’s been under for 13 straight months.

The core measure, which strips out volatile food and fuel prices, has been decelerating amid subdued demand.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Nigeria Holds Key Rate as Economic Growth Remains Sluggish

© Reuters.  Nigeria Holds Key Rate as Economic Growth Remains Sluggish © Reuters. Nigeria Holds Key Rate as Economic Growth Remains Sluggish

(Bloomberg) — Nigeria’s central bank held its benchmark rate for a third straight meeting as economic growth in the West African nation remains sluggish.

All nine members of the Monetary Policy Committee who attended the meeting voted to keep the rate at 13.5%, Governor Godwin Emefiele told reporters Friday in the capital, Abuja.

Key Insights

  • The central bank is caught between inflation that’s been above the target range for more than four years and an economy that’s still struggling to recover from a contraction in 2016. Growth in gross domestic product was lower than forecast and slowed for the second consecutive quarter in the three months through June. With limited scope to ease policy, the central bank has started forcing lenders — through regulations and penalties — to give out more credit in an attempt to stimulate growth.
  • Inflation eased to a 43-month low in August as food costs grew less. However, food-price growth may pick up again after President Muhammadu Buhari closed the border with Benin to halt rice smuggling and ordered the central bank to stop dollar supplies for some food imports.
  • The naira continues to be under pressure and by keeping rates on hold, the central bank would ensure portfolio investment doesn’t slump.

“Projections indicate that real GDP during the third and fourth quarter of 2019 would average 2.11% and 2.34% respectively, driven primarily by non-oil sector,” Emefiele said. “The headwinds to the growth prospects remain high — unemployment, rising public debt and high insecurity across the country.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Yen Rises After BOJ Meeting; U.S. Dollar Slips as Fed Cut Rate as Expected

© Reuters.  © Reuters.

Investing.com – The Japanese yen rose against the U.S. dollar on Thursday in Asia following the conclusion of the Bank of Japan’s meeting.

The pair fell 0.6% to 107.79 by 11:52 PM ET (03:52 GMT). The Bank of Japan kept its short-term rate target at -0.1%, but noted in a statement that “it is becoming necessary to pay closer attention to the possibility that the momentum towards achieving its price target will be lost.” BOJ governor Haruhiko Kuroda will provide a briefing later in the day.

“Taking this situation into account, the BOJ will re-examine economic and price developments at its next policy meeting, when it updates the outlook for economic activity and prices,” it said.

The slipped 0.1% to 98.058 after the Federal Reserve lowered its interest rates to the 1.75-2% range from the previous 2-2.25%. The move, which was widely expected by analysts, was the second rate cut this year.

The pair was down 0.5% to 0.6790 following mixed jobs reports released in the morning.

The pair lost 0.1% to 0.6312 after data showed the country’s economy grew at the slowest pace in more than five years in the second quarter.

The grew by only 2.1% from a year earlier and was the weakest annual growth since the fourth quarter of 2013, Statistics New Zealand reported on Thursday.

The New Zealand dollar initially rose after the report, but gave back its gains and currently trades in the red.

The pair rose 0.3% to 7.1029.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Dollar slips ahead of Fed rate decision, euro rises

© Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul © Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul

By Kate Duguid and Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The U.S. dollar fell on Tuesday in range-bound trading on the eve of an expected interest rate cut by the Federal Reserve, weakened by a fall in oil prices and a stronger euro.

Oil prices dropped about 6% on Tuesday after Saudi Arabia’s energy minister said the kingdom had fully restored its oil production, following an attack over the weekend that shut down 5% of global oil output. That reversed some of the dollar’s gains on Monday when investors rushed into safe-haven assets.

The euro was up 0.59% at $ 1.1065 (), after an influential survey showed a brightening in German investor confidence. The ZEW index improved to -22.5 in September versus forecasts of -37 and the August reading of -44.1.

Thierry Wizman, global interest rates and currencies strategist at Macquarie Group, said he was seeing a bid in the forex market. “It’s maybe why the euro is doing a little better here,” he said. “You also had some good data in Europe as well that has sparked a bit of this euro rally today too.”

While many investors are expecting the Fed to announce a 25 basis point rate cut following the close of its two-day policy meeting on Wednesday, some believe it may be the last rate cut for a while absent more evidence of a U.S. economic slowdown.

“If the Fed does cut 25 basis points, then we think it will be the last time until we really do see signs of recession,” Brown Brothers Harriman strategists said in a note.

Against a basket of its rivals (), the greenback was 0.35% lower to 98.266.

The overnight rate, or the cost for banks and Wall Street dealers to borrow dollars , surged to 10% on Tuesday, the highest level since at least January 2003, according to Refinitiv data.

Analysts attributed quarterly corporate tax payments and settlement of $ 78 billion in Treasury debt supply for the spike on Monday in interest rates in the repurchase agreement market.

“This morning’s funding squeeze has put some upward pressure earlier in the dollar, but that is not likely to be a longer-term driver,” said Erik Nelson, currency strategist, at Wells Fargo (NYSE:) Securities in New York.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Sterling falls before Brexit vote, euro down on rate outlook

© Reuters. Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna © Reuters. Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company’s headquarters in Vienna

By Stanley White

TOKYO (Reuters) – Sterling neared its weakest against the U.S. dollar in more than two years on Tuesday amid mounting uncertainty as British lawmakers prepared to vote on the first stage of a plan to block Prime Minister Boris Johnson from pursuing a no-deal Brexit.

Johnson’s opponents will put forward a vote that would enable them to seize control of the parliamentary agenda on Wednesday to try to pass legislation that would force Johnson to seek a three-month delay to Britain’s EU exit. Johnson has made it clear that if the government was defeated, it would hold a vote on Wednesday to approve an early election, most likely to be held on Oct. 14.

“The pound is being sold all over the place, because the political risk has forced us to recognize that a no-deal Brexit is possible,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

“At this point, I see no reason to stay long in sterling.”

Sterling fell 0.23% to $ 1.2035 in Asian trading on Tuesday, having tumbled 0.8% on Monday, its biggest decline in more than three weeks.

The euro held onto Monday’s 0.7 % gain against the pound to stand little changed at 90.90 pence ().

A messy exit from the European Union certain to weaken the pound, but it could roil other currencies and other markets as investors adjust their positions to exit trades in riskier assets.

U.S. financial markets were closed on Monday for a public holiday, but weakness in other major currencies and a slight rise in U.S. Treasury yields in Asia helped the () rise 0.22% on Tuesday to 99.284.

The euro fell to its weakest in more than two years against the dollar after a survey on Monday showed European manufacturing contracted for seven straight months, reinforcing expectations that the European Central Bank will ease monetary policy at a meeting next week.

The euro () fell to $ 1.0954 in Asia on Tuesday, its weakest since May 2017, with sentiment damaged by the break below the key $ 1.1000 level last week.

The ECB’s Governing Council holds its next monetary policy meeting on Sept. 12 and has all but promised a stimulus package, with economic growth faltering amid a global trade war and Germany’s manufacturing sector already in recession.

Market expectations are that it will carry out several interest rate cuts in the coming year, along with a fresh round of bond purchases, commonly known as quantitative easing.

Elsewhere in the currency market, the hit a record low of 7.1960 per dollar in early offshore trade after Bloomberg News reported that Chinese and U.S. officials are struggling to agree a schedule for a round of trade negotiations that had been expected this month.

In onshore trade, the yuan briefly fell to 7.1825 per dollar, the lowest since February 2008, before recovering to 7.1811.

The Reserve Bank of Australia’s decision to leave interest rates unchanged at a record low of 1% saw the Australian dollar ease 0.11% to $ 0.67111. Economists expect the RBA to cut two more times to boost inflation and support a stuttering economy, a Reuters poll showed.

The New Zealand dollar skidded to $ 0.6270, the lowest since September 2015. The has fallen for the past seven trading sessions as weak data last week on business confidence bolstered the case for further interest rate cuts.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Yuan wobbles on Trump trade comments, details of China rate reforms awaited

HONG KONG (Reuters) – The yuan wavered on Monday after U.S. President Donald Trump said he was not ready yet to make a trade with China.

Traders were also cautious ahead of the debut of China’s new benchmark lending rate on Tuesday, which was announced at the weekend.

Analysts believe the reforms will open the door to rate cuts, possibly as early as Tuesday, but are divided over the size of any initial reduction and how much it may help struggling smaller companies in the near term.

Spot yuan traded at 7.0447 per dollar at midday, pretty much unchanged from the last session close and 0.12 percent away weaker than the midpoint , which was set by the People’s Bank of China at 7.0365.

The central bank on Saturday unveiled long-awaited interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been dragged by its protracted trade war with the United States.

The revamped loan prime rate (LPR), effective on Tuesday and linked to rates in medium-term lending facility (MLF), is the equivalent of a 45 basis point rate cut on loans, ANZ analysts wrote in a note on Monday. Several traders said they expect the new LPR to trim by 10 to 15 basis points.

The tweak will help achieve the State Council’s goal of easing financing costs for small businesses by 1 percentage point, but tax cuts will also shoulder part of that, according to a Shanghai-based trader.

“We need to hear more about the supplementary measures,” to gauge how far LPR and MLF rates will fall, said another trader in Shanghai.

However, unlike more open markets such as the United States, China’s capital control will likely cap the pressure from lower interest rates on its managed currency, said a Hong Kong-based trader, adding “it will trade where the PBOC wants it to be.”

Traders said the U.S.-China trade talks will continue to dominate the yuan’s direction in the near term.

White House economic adviser Larry Kudlow said on Sunday trade officials from the two countries would speak within 10 days and a Chinese delegation is flying to the United States to follow up.

But Trump said on the same day he is “not ready” for a deal with Beijing, hinting again that he would like to ongoing protests in Hong Kong resolved first.

Trump also said he would not like to deal with Huawei Technologies Co Ltd – even after Reuters and other media outlets reported on Friday the U.S. Commerce Department is expected to extend a reprieve for the company to buy supplies from U.S. companies.

The was trading 0.14 percent softer than the onshore spot at 7.0545 per dollar.

The global () rose slightly to 98.207 from the previous close of 98.142.

US China interest rate – Aug 19, 2019 – https://fingfx.thomsonreuters.com/gfx/mkt/12/4892/4849/US%20China%20interest%20rate%20-%20Aug%2019,%202019.jpg

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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