TODAY FOREX REPORT FOR 07/08/2014

MARKET HEADLINES
 

China's yuan crosses midpoint into stronger territory for 1st time since March
China's foreign exchange market on Wednesday traded yuan at a higher price than the official guidance rate for the first time since the currency's trading band was widened in March. The movement illustrates the steady return of bullish sentiment even in the face of flat guidance from the central bank. The People's Bank of China (PBOC) set the daily midpoint rate at 6.1681 per dollar on Wednesday. But the spot rate traded at 6.1680 per dollar in the afternoon, firmer than the midpoint for the first time since
March 11 and its strongest position against the dollar since March 17. On March 15, the PBOC widened the intraday trading band - the range the spot rate has to trade above or below the daily fix - to 2 percent up from 1 percent, allowing greater two-way volatility into the market. Traders said the bank engineered a 3.3 percent depreciation in the Chinese currency in the first four months of this year to deter speculators from betting on a non-stop yuan appreciation. This caused the spot rate to trade far weaker than the midpoint for several months.

South Korean won falters on firm US dollar, stocks down
The South Korean won dropped on Wednesday as risk aversion stemming from escalating geopolitical tensions in Ukraine and broad dollar strength pressured the local currency. The won was quoted at 1,033.7 against the dollar at the end of onshore trade, down 0.5 percent from Tuesday's local close at 1,028.2. South Korean shares were also dragged down by concerns over Ukraine and profit-taking from institutions in afternoon trade, leaving the Korea Composite Stock Price Index (KOSPI) down 0.3 percent at 2,060.73 points. Institutions dumped a net 123.2 billion won ($119.21 million) worth of KOSPI shares after they turned net sellers past midday.

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