Yuan extends losses on Tuesday but yen surges after bomb attack at Brussels airport

The yuan extended its losses on Tuesday to hit a one-week-low against the US dollar which bounced back this week against most other currencies, barring the yen after a terrorist attack in Brussels during the afternoon.

Offshore yuan fell to 6.4960 to the US dollar in early afternoon trade, down 0.2 per cent from Monday when it dropped 0.33 per cent which was the biggest single day drop in seven weeks. It bounced back to 6.4928 in the evening, but was still down 0.15 per cent.

Yuan rises to fresh three-week high on central bank cue as chances of another US interest rate rise fade

The currency has fallen by 0.5 per cent in the first two trading days of this week after hitting a four-month high of 6.4816 on Friday.

Stephen Innes, senior trader of OANDA said the US dollar rally came after Atlanta Fed President Dennis Lockhart said on Monday that given continued US economic growth, “there is sufficient momentum evidenced by the economic data to justify a further step at one of the coming meetings, possibly as early as the meeting scheduled for end of April.”

Innes said these comments “stopped the US dollar bears in their tracks.”

“I’m not in that court given global economic uncertainty, it’s highly doubtful the Fed is going to move in April, and I still believe there is a less than 50 per cent chance they will hike rates in June. If this scenario holds true it should weigh negatively for US dollar prospects through mid-2016.” he added.