DAILY FOREX REPORT FOR 08 SEPTEMBER 2014

MARKET HEADLINES

  
China's yuan drops on central bank guidance, set to end flat for week
China's yuan declined against the dollar on Friday due to a weaker midpoint fix and is set to end flat for the week, as markets await the release of August trade data. Spot yuan stood at 6.1411 by midday, 0.04 per cent softer from Thursday's close, almost unchanged on the week. On Friday, the People's Bank of China (PBOC) set the midpoint rate at 6.1707 per dollar, down 0.07 per cent from the previous fix,
reflecting the sharp rise of the US index on Thursday. The US dollar posted an over 1 per cent rise overnight after the European Central Bank cut interest rates on Thursday. The market is expecting the release of trade data for August to shed light on the direction of the Chinese currency, with some positive expectations slowly driving up the yuan recently, traders said. "If the August's trade surplus continued to be good, it would definitely add more pressure to the yuan's appreciation in the coming months," said a trader at an Asian bank in Shanghai. A Reuters poll projected August trade surplus would be $40 billion, slightly down from July's historical high $47.3 billion.

Dollar extends gains, hits 6-year high against yen
The dollar rose to a six-year high versus the yen on Friday, drawing broad support after the European Central Bank's latest monetary easing as traders waited for the US jobs report later in the day. The dollar climbed to as high as 105.71 yen, its highest level since October 2008, and last stood at 105.60 yen, up 0.3 per cent on the day.

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