MARKET HEADLINES
China's yuan rises despite daily midpoint fix at 3-month low
China's yuan firmed against due to dollar sales by corporates on Wednesday, though the central bank had fixed its daily guidance level at a three-month low. The People's Bank of China set the midpoint rate at 6.1697 yuan per dollar prior to market open, its weakest level since June 3, down 0.02 per cent from the previous fix, reflecting the dollar's strength in global markets. The yuan's spot rate is currently allowed to trade 2 per cent above or below the midpoint. The spot market opened at 6.1469 per dollar, and was changing hands at 6.1449 by midday, 0.06 per cent firmer from the previous close.The premium of the spot rate against the midpoint widened to 0.40 per cent from 0.37 per cent at midday on Tuesday, indicating a divergence in views between the market and
US dollar climbs as yen, sterling sag; euro off lows for now
The dollar hovered at 14-month highs against a basket of major currencies on Wednesday, underpinned by stronger-than-expected US data and a resulting rise in Treasury yields. The greenback received further support from a sell-off in the yen, which neared a six-year low against its US counterpart, and in sterling, pummelled by opinion polls suggesting growing support for Scottish independence in a referendum later this month. The dollar traded near an eight-month high of 105.28 yen . A rise above 105.45 yen would take the dollar to a high not seen since October 2008. The sell-off in the yen coincided with renewed hopes about a highly anticipated portfolio change in Japan's behemoth Government Pension Investment Fund (GPIF), stirred by the forecast appointment of reform-minded Yasuhisa Shiozaki to head the ministry that oversees the fund. Due to be announced in coming weeks, the GPIF asset allocation overhaul is expected to see the fund move into riskier assets including stocks and foreign bonds, which could increase demand for foreign currencies. The reshuffle is due to be announced later on Wednesday but the likely names have been widely discussed in the media. The spike in intra-day volatility that jerked dollar/yen out of a well-worn 101-103 range marks an end to the summer lull. Expectations were mounting for the dollar to move higher and participants were waiting for a trigger. It was a little surprising to see such a big reaction to Shiozaki's appointment. But for forex market players like us, the reason is not important as long as currencies move," said Bart Wakabayashi, head of currencies at State Street in Tokyo.
US dollar climbs as yen, sterling sag; euro off lows for now
The dollar hovered at 14-month highs against a basket of major currencies on Wednesday, underpinned by stronger-than-expected US data and a resulting rise in Treasury yields. The greenback received further support from a sell-off in the yen, which neared a six-year low against its US counterpart, and in sterling, pummelled by opinion polls suggesting growing support for Scottish independence in a referendum later this month. The dollar traded near an eight-month high of 105.28 yen . A rise above 105.45 yen would take the dollar to a high not seen since October 2008. The sell-off in the yen coincided with renewed hopes about a highly anticipated portfolio change in Japan's behemoth Government Pension Investment Fund (GPIF), stirred by the forecast appointment of reform-minded Yasuhisa Shiozaki to head the ministry that oversees the fund. Due to be announced in coming weeks, the GPIF asset allocation overhaul is expected to see the fund move into riskier assets including stocks and foreign bonds, which could increase demand for foreign currencies. The reshuffle is due to be announced later on Wednesday but the likely names have been widely discussed in the media. The spike in intra-day volatility that jerked dollar/yen out of a well-worn 101-103 range marks an end to the summer lull. Expectations were mounting for the dollar to move higher and participants were waiting for a trigger. It was a little surprising to see such a big reaction to Shiozaki's appointment. But for forex market players like us, the reason is not important as long as currencies move," said Bart Wakabayashi, head of currencies at State Street in Tokyo.
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