Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
Chinese yuan dropped after dire inflation data
2020-10-15 • Updated
USD/CNH has been steadily dipping, but downbeat China’s PPI and CPI limit the further falling.
Chinese Producer and Consumer Price Indices came out worse than analysts anticipated: CPI rose by 1.7% vs. the forecast of 1.9%, whereas PPI contracted by 2.1% vs. the -1.9% expected.
The People’s Bank of China (PBoC) is unsatisfied with too much appreciated CNH as it makes China’s exports more expensive for buyers. In fact, China has been the world's largest exporter of goods since 2009. Why? Their products are simply cheaper, that’ why it’s crucial for China not to lose this advantage.
The PBoC changed the rules, making it cheaper for traders to bet against the yuan. According to Reuters, the bank claimed it “would lower to 0 from 20% the reserve requirement ratio for financial organizations when conducting some foreign exchange forwards trading”. By the way, analysts said that the PBOC tried the same move in 2017 and it didn’t help to stop the appreciation of the yuan.
The negative inflation data weighed on the Chinese yuan, and PBoC’s actions added headwinds to it. Besides, the pair is rising due to the high demand for the USD amid the risk-off sentiment.
According to United Overseas Bank, USD/CNH will keep falling in the long-term and will reach 6.60 by the middle of next year.
USD/CNH has been trading in a descending channel since late May. It may jump to the resistance of 6.7625, but the pair isn’t likely to break the upper trendline. We can expect it to bounce off this level and drop to the recent low of 6.6850, clearing the way towards the next support of 6.6500.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.