The first days of May suggest the month will be risk-off for the GBP/USD. Here is why.
Yuan concludes at 22-month minimum
On Thursday, the Chinese Yuan slumped beyond 6.95 per greenback, hitting its weakest value since January last year and breaking a level that some market participants had expected the Chinese government to defend.
By the end of the domestic trading marathon the spot <CNY=CFXS> had stabilized concluding at a reading of 6.9498 per greenback, diving about 0.11% from the previous night settlement, and being the weakest outcome for 22 months.
What’s more, some investors currently consider 7 yuan per greenback to be a level last observed during the global financial downtime, as the next resistance mark for the major Chinese currency.
Before the start, the PBOC had the midpoint rate <CNY=PBOC> set at about 6.9409 per greenback that appears to be a bit weaker than Wednesday's reading of 6.9357. By the way, the spot rate is capable of trading 2% below or above the midpoint.
As a matter of fact, onshore trading volume <CNYSPTVOL=CFXT> kept to $31.3 billion, which happens to be less than half the unexpectedly high volume of about $66.3 billion observed on Wednesday.
Eventually, the Yuan's late dive follow the publication of data from the Chinese FX regulator that disclosed that in September Chinese financial institutions sold a net $17.6 billion of foreign exchange to retail customers, which is higher than August’s outcome of $14.9 billion.
In addition to this, the Thomson Reuters/HKEX Global CNH index, gauging the offshore Yuan against a pack of currencies on a daily basis, kept to 92.67. The given result appears to be weaker than the reading recorded the previous day - 92.73.
Besides this, offshore one-year non-deliverable forwards contracts <CNY1YNDFOR=>, which are considered to be the ideal proxy for forward-looking market expectations of the Chinese Yuan’s value, accounted for 7.0436, rebounding nearly 1.46% from the midpoint.
UK Prime Minister was placed in the intensive care. As a result, the British pound plummeted dramatically today.
The head of the Federal Reserve Jerome Powell will testify on the Semiannual Monetary Policy Report on Tuesday and Wednesday
The US NFP will be published on August 7 at 15:30 MT time.
The market sentiment is indeed risk-on today. Stocks, riskier currencies and gold are rising amid the waning US dollar.
Follow the BOE monetary policy and rate statements on August 6 at 14:00 MT time…