Published: 22 Oct at 12 PM Tags: Dollar, America, USA, China,
After advancing against the US Dollar for over a week the Yuan dipped as the Peopleâ€™s Bank of China
opted to trim the daily reverence rate after raising it to the highest level for eight years yesterday.
The central bank cut the daily reference rate to 6.1395 per US Dollar and Chinaâ€™s Yuan consequently softened to 6.0935 per Dollar.
Last week the Asian asset brushed a twenty-year high of 6.0915.
According to economist Suan Teck Kin; â€˜The message is quite clear: The Yuan is not a one-way bet. [Fixing is] not accommodating the rise in the spot market as it would encourage more strengthening of the currency. You also have the Dollar slightly coming back in anticipation of the non-farm payrollsâ€™.
While the US Dollar has posted widespread declines since the partial Federal shutdown, the â€˜Greenbackâ€™ has clawed back some ground prior to the publication of US non-farm payrolls for September.
The report was originally intended for release on October 4th but was delayed because of the shutdown. Economists are expecting the data to show that the US economy added 180,000 positions in September.
Though this would be a positive result, and an improvement on Augustsâ€™ gain of 169,000, October's nonfarm payrolls is expected to have been adversely affected by the budget impasse, perhaps even wiping out Septemberâ€™s advance.
As currency strategist Antje Praefcke notes; â€˜Attention is on the payrolls report, and the Dollar is in focus. The number needs to be very, very good to change the market perception of the impact of the shutdown. With the focus on US monetary policy, many people have changed their expectations regarding the Fedâ€™s stimulus and that means a weaker Dollar.â€™
Furthermore, the US unemployment rate is forecast to hold at 7.3 per cent â€“ above the Federal Reserveâ€™s target. If this is the case it will add to the argument for the Federal Reserve holding off tapering stimulus until next Spring â€“ boosting higher-risk assets at the expense of the US Dollar in the process.
US non-farm payrolls is scheduled for publication at 13:30 GMT
As of Tuesday, 22nd October 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP USD exchange rate was 1.6234, and GBP CNY exchange rate was 9.8905.