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ForexLive Asia FX news wrap: Yuan gains

Forex news for Asia trading on
Wednesday
20
October 2021

China-related:

Other:

Much
of the focus of the session was on China with early limit moves lower
for coal and coke due to the overnight news on China’s state
planner (the National Development and Reform Commission of the
People’s Republic of China (NDRC)) threatening intervention in the
coal market following a meeting with key players domestically.

The
barrage of news and data continued out of China, as you can see above
I’ve rejigged the format of the bullet-point links to headlines for
the day to group the China, and China-related, items together.

From the PBOC we had a substantial injection of funds via open market operations (OMO), following a string of days of drains or neutral. The injection is said to be related to tax season payments and government bond issuance. The PBOC have been consistent in saying that it would be keeping domestic liquidity conditions stable using medium-term lending facilities (MLF – we saw one of these conducted last Friday) and OMOs (we saw this today). 

The yuan hit a five and a half year high against its basket today.

Elsewhere
across major FX:

  • USD/JPY
    hit a nearly four high above 114.60, yen crosses higher also of
    course
  • EUR,
    AUD, NZD, GBP and CAD all rose for gains (not overly large) against
    the USD. ‘Reflation’ was the word again with global bond pricing
    higher prevalent. Indeed, the spread between the US 3 mth and 10 year
    hit its widest since June and the 10 yr yield moved to a 5 month
    high.

Having
noted the move higher for currencies I should also add that since the
highs there has been some retracement across the board, to varying
extents. 

USD/JPY to its highest since November of 2017 today, monthly candles:

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