Today’s moves in Asia made it pretty clear that the market interest in the Chinese Yuan has waned and is now refocused on the continuing global economic recovery. Today’s mid day price fix of the Chinese currency saw only muted reactions in risk after stealing the spotlight as the main event over the past two days. Continued talk of Chinese banks playing both sides of the Yuan pricing as well as the sentiment that the moves by Beijing were deftly timed political plays ahead of the upcoming Toronto G-20 meetings this weekend helped dampen interest.
Markets instead followed through with the risk adverse pattern that was begun in New York after disappointing existing home sales data. Weekly highs were touched in both the dollar and the yen in mostly calm trading that was devoid of any real surprises. EUR/USD saw a low dip under the 1.2245 level, but the pair recovered to remain contained near 1.2260/65 for the remainder of the session. The yen advanced against the crosses, as it touched near 110.75 highs against the Euro and 87.75 against the Canadian dollar. Against the dollar, the yen saw limited action once again as today’s trading range encompassed the real estate in between 90.35 and 90.55.
The Aussie was lower on the day with 0.8680 lows against the dollar and 1.2340 lows against the New Zealand dollar. Upbeat current account balance out of New Zealand saw the NZD/USD to a 0.7060 peak, but the pair wallowed closer to 0.7040 as the session wound down. The island nation will start tomorrow off with GDP data, the only top tier release on the table for the day.
Equities in Asia were beaten down for a second day in a row on the evaporation of risk appetite, with Japan’s Nikkei lower by almost 2% and Australia’s S&P/ASK weaker by about 1.50%. Gold, XAU/USD, remained lofty between $1237.00 and $1241.50 on the renewed concerns of limited global growth.
From here, traders will set their sights on two events, one in London, and one later in New York. First on the table is the potentially volatile UK Monetary Policy Committee meeting minutes due at 8:30GMT, and secondly, the FOMC meeting statement due at 18:15GMT.