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Enoch Yiu

The Chinese yuan softened to its weakest level in three days on Thursday while the US dollar fell against most other currencies as the trade digested news that the US Federal Reserve will not embark on raising interest rates immediately and may wait for later in the year to do so.
The onshore yuan traded at 6.2091 at 10:30 am, off by 0.01 per cent from the Wednesday close.
The move came despite the People Bank of China setting the mid-price at 6.1126, the strongest since May 20. Traders can trade two per cent above or below the mid-price set by the PBOC.
The offshore yuan also softened to its weakest in three days at 6.2067.
The US dollar fell against most other currencies. The British pound rose to a one month high at 1.5838, the Euro rose to a one-week top at 1.1371 while the Japanese yen also rose to a one-week high at 123.8.
Mark Wan, chief analyst of Hang Seng Investment Services, took note of news that US Federal Reserve chair Janet Yellen would want to see labour markets were healing, and that wages would increase beyond their current "subdued pace" before acting on rates.
“The market believes these two conditions could only be ready in September or December. As such, the US is unlikely to increase the interest rate as soon as in June which was what many traders expected earlier this year,” he said. “This disappointed many currency traders and the US dollar fell accordingly.”
For the outlook, he believes the US dollar would continue to be strong against the yen which may further go down to 126 at the end of this year. But he believes the euro would strengthen to reach the level of 1.2.
“Many European trade figures look good while inflation has increased. This may lead the European countries to cut down its QE programme and this would support the euro,” he said. “The Greece debt crisis is a worry but it is too small to have a big impact on the outlook of the euro.”
The Hong Kong dollar remained flat at 7.7519, near the upper end of its trading band.


China’s yuan softer along with US dollar as market digests Fed news

Chinese yuan notes in Shanghai as the currency traded at its softest in three days while currency markets digested news that a rate increase by the US Fed may be several months away still. Photo: EPA

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.css-sioo19{color:#c79a00;}New | China’s yuan softer along with US dollar as market digests Fed news

New | China’s yuan softer along with US dollar as market digests Fed news