China’s yuan – “nowhere for it to go but down” & intervention coming

Scanning some pieces, this from Friday has comments on the levels ahead for the Chinse yuan.

Dan Rosen, a senior associate at the Center for Strategic and International Studies.
  • “There is nowhere for it to go but down” 
  • “Over the course of 2021, the question will be how much does the renminbi subside against the dollar”
  • “I think we’re going to see them intervene to put some bands around [the yuan]” 
Derek Scissors, at the American Enterprise Institute and also chief economist at China Beige Book:
  • China will intervene to keep the yuan from strengthening much further
  • and then controlling a slow depreciation as the US economy recovers
If you do check out that link above there is a wider discussion on US-China relations.
Scanning some pieces, this from Friday has comments on the levels ahead for the Chinse yuan.

USD strength on risk off mood

Dollar strength

Dollar strength
The USD is stronger against most of the majors today as the market de-risks into the weekend after a strong week for risk assets. No reason for risk off mood, just a pause for breath and it may reverse during the sessions ahead.

Dollar Index finds support at 90.00

DXY

The risk off tones helping the USD find bids. 90.00 is support for now. As long as the risk off tone remains expect DXY buying from that 90.00 level today. However, as there is no catalyst for the risk off tone remember that this can all turn around quickly. Medium term dip buyers will step into risk assets if they slip too far too fast.
DXY 

Yen crosses piling on the gains in Asia trade

USD/JPY is higher while the USD is weaker pretty much across the board elsewhere.

Resulting in good-size gains for yen crosses during the session here.
AUD/JPY for example:
USD/JPY is higher while the USD is weaker pretty much across the board elsewhere.
Risk is stronger all over the shop – HK’s Hang Seng is hitting highs last seen in May 2019.
There is not much in the way of immediately obvious catalysts on the session.

CFTC commitments of traders: EUR longs move back up to December highs

Weekly forex futures positioning data from the CFTC

  • EUR long 156K vs 143K long last week. Long increased by 13K
  • GBP long 13K vs 4K long last week. Longs increased by 9K
  • JPY long 50K vs 50K long last week. Unchanged
  • CHF long 12K vs 9K long last week. Longs increased by 3K
  • AUD long 5K vs 4K short last week. Longs increased by 9K
  • NZD long 15K vs 12K long last week. Longs increased by 3K
  • CAD long 12K vs 14K long last week. Longs trimmed by 2K

Highlights:

  • EUR longs remain the largest speculative position at long 156K. That equals the December high long position.
Weekly forex futures positioning data from the CFTC_
  • JPY longs at 50K are unchanged but remain the next largest net speculative position
  • AUD position switched to long 5K from short 4 last week.
  • All major currencies are now long the currency (short the USD).

The short term lid on the US dollar

Comments from Westpac senior currency analyst Sean Callow quoted in a Reuters piece in response to Powell speaking on Thursday (US time).

  • “Shorter-term, Powell just put a lid on the US dollar”
  • “The baseline case is still for a substantial acceleration in the global economy, which historically has proven to be positive for most currencies against the USD, but I think there is potential to at least have a debate over whether us USD will be quite as weak as people expect. “

Will INR appreciate against the US dollar in 2021?

Is the Indian Rupee set for a third straight year of fall against the USD or will it make a comeback in 2021?

FXLRImage source: PixaHive

2020 has been a highly volatile year for the major international currencies, as international trade and supply chain disruptions combined with mixed investor sentiment led to extensive fluctuations.

As an aftermath of the pandemic, the world’s reserve currency the U.S. dollar (USD), has declined steeply throughout the past year, making it the worst-performing currency among the G10 currencies.

This is reflected in the US Dollar Index’s 7.53% decline over the past year. The Indian Rupee (INR) did not fare any better, as it was the worst-performing currency in the Asian subcontinent over the past year.

INR and USD – 2020 Performance

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