Reuters reported that Chinese authorities are considering abandoning their stable yuan policy and allowing the CNY to weaken, notes Shaun Osborne, Chief FX Strategist at Scotiabank.
USD rises for fourth day as markets position themselves for CPI data
“The CNY fell 0.3%, dragging its regional peers lower and weakening the AUD and NZD. The JPY was volatile around comments attributed to “people familiar” with the BoJ’s policy deliberations; Officials apparently see little cost in waiting to raise interest rates, but remain open to raising them next week. Swaps now reflect a 4-5bp upside risk in next week’s policy decision, versus. to 16 bp at the end of last week.”
“The US CPI data for November may heighten concerns among some Fed officials that progress on inflation has stalled since the summer, when core inflation stood at 3.2%. The consensus anticipates an increase of 0.3% in general and underlying prices in the month, raising the general inflation rate for the year by one tenth to 2.7% and maintaining the underlying rate at 3.3%. consensus may not matter “significantly on market expectations of a 25bp rate cut by the Fed next week, but could increase the risk that Fed communications sound a little more cautious about the outlook.”
“Firm data will give the USD a modest boost at least. Note that the Cleveland Fed’s Core PCE Nowcast gauge anticipates a rebound in November to 2.9% YoY, the highest since last December. Assuming we get a 1/4 point cut next week to 4.50%, futures suggest easing in 2025 may be limited to just another 50-75 bps in the U.S. target rate. “Feed funds. Shallower rate cuts in the US compared to Europe will support prospects for a strong USD for longer into 2025.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
