The offshore yuan fell after Chinese policy makers acted to restrain its strength by making it easier to bet against. Stocks began the week in mixed fashion.
The yuan fell as much as 0.7% lower against the dollar, which ticked higher against major peers. The Australian dollar also slipped. S&P 500 futures dipped after the benchmark ended higher last week, with some traders betting lawmakers are moving closer to reaching an agreement on stimulus. Shares dipped in Japan, were little changed in Australia and edged higher in Hong Kong and South Korea. Crude oil declined and gold was steady. Treasuries won’t trade Monday due to the U.S. holiday.
China set the daily currency fixing weaker than expected on Monday after the central bank removed rules that made it expensive to bet against the yuan. Financial institutions will no longer need to set aside cash when buying foreign exchange for clients through currency forwards.
“We still see scope for further yuan appreciation, especially with China’s strong growth momentum, wide yield differential and strong inflows in part due to index inclusion,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore. “But the authorities want to encourage more two-way flows, and removing the reserve requirement will help.”
Meantime, the U.S. stimulus saga rolls on, with President Donald Trump and House Speaker Nancy Pelosi blaming each other for a lack of progress on a deal. Trump trails Joe Biden by 12 points in a national poll of likely voters a little more than three weeks before Election Day, according to a Washington Post/ABC News poll released on Sunday.
“Markets that once feared a Democratic sweep now appear to be hoping that the Democrats do take control of the Senate, with the polling leads for Biden boosting optimism for greater stimulus,” said Ben Emons, managing director for global macro strategy at Medley Global Advisors.
Trump was cleared by his doctor and is no longer considered a coronavirus transmission risk to others, meeting the criteria to end self-isolation, his physician Sean Conley said. The virus continued its unrelenting spread in Europe, with France posting another daily infection record and Germany reporting the most Covid-related deaths since May.
Here are some key events coming up:
Monday is the Columbus Day holiday in the U.S.U.K. Prime Minister Boris Johnson set a deadline of Thursday to thrash out the outline of an EU trade deal.Earnings from JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc. and Johnson & Johnson are due this week.IMF/World Bank meetings continue.
These are the main moves in markets:
S&P 500 futures dipped 0.1% as of 10:25 a.m. in Tokyo. The gauge rose 0.9% on Friday.Japan’s Topix fell 0.3%.Hong Kong’s Hang Seng Index gained 0.4%.Shanghai Composite advanced 0.5%.South Korea’s Kospi added 0.2%.Australia’s S&P/ASX 200 Index slid 0.1%.Euro Stoxx 50 futures were little changed.
The offshore yuan fell 0.7% to 6.7343 per dollar.The Bloomberg Dollar Spot Index rose 0.1%.The yen was steady at 105.61 per dollar.The euro bought $1.1820, down 0.1%.The Aussie fell 0.4% to 72.14 U.S. cents.
The yield on 10-year Treasuries ended last week at 0.77%.Australia’s 10-year yield remained at 0.85% on Monday.
West Texas Intermediate crude fell 1% to $40.20 a barrel.Gold was little changed at $1,929.59 an ounce.
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