1. China’s Yuan weakens in cautious mood ahead of G20, US jobs data

China’s Yuan weakens in cautious mood ahead of G20, US jobs data

China's yuan weakened on Thursday morning, with investors cautious ahead of the upcoming G20 summit and U.S. labour figures that may put the Federal Reserve on course to raise rates as early as this month.

By: | Shanghai | Updated: September 1, 2016 10:44 AM
Markets speculate that Chinese policymakers will want to keep the currency stable at this time. (Reuters) Markets speculate that Chinese policymakers will want to keep the currency stable at this time. (Reuters)

China’s Yuan weakened on Thursday morning, with investors cautious ahead of the upcoming G20 summit and U.S. labour figures that may put the Federal Reserve on course to raise rates as early as this month. Traders expect spot yuan to fluctuate in a narrow range as world leaders of the Group of 20 nations gather in the eastern city of Hangzhou this weekend. Markets speculate that Chinese policymakers will want to keep the currency stable at this time. “The market is waiting for the outcome from the G20, and no one knows what may yield from the meetings,” said a trader at a European bank in Shanghai. “And investors are waiting for the U.S. non-farm payrolls data,” he added, indicating the U.S. Labor Department’s employment report on Friday could change investors’ bets over the timeline and trajectory of U.S. interest rate increases.

The People’s Bank of China set the daily midpoint at 6.6784 per dollar prior to the market open, firmer than the previous fix of 6.6908. The spot market opened at 6.6795 per dollar and was changing hands at 6.6804 at midday, 14 pips weaker than the previous close and 0.03 percent away from the midpoint. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.14, flat with the previous day’s 95.14. The global dollar index fell to 95.978 from the previous close of 96.022. The offshore Yuan was trading 0.14 percent weaker than the onshore spot at 6.69 per dollar. The Yuan market at 0332 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.6784 6.6908 0.19% Spot yuan 6.6804 6.679 -0.02% Divergence from 0.03% midpoint* Spot change YTD -2.80% Spot change since 2005 23.89% revaluation Key indexes: Item Current Previous Change Thomson 95.14 95.14 0.0 Reuters/HKEX CNH index Dollar index 95.978 96.022 -0.1 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot Yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.69 -0.14% * Offshore 6.835 -2.29% non-deliverable forwards

The negative number indicates that spot Yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning.

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