The Bank of Canada move reverberated across markets Wednesday:
The rate hike from the BOC was a surprise, but just a should pout to Scotia for tipping it, as posted yesterday:
In the wake of the BoC hike US
Treasuries lost ground
- CAD strengthened immediately
after the decision, but gave it back - AUD and NZD were two of the weakest majors after the announcement
- US equities had opened with a rally, but these fell away after the BoC, NQ big-time
As for the yuan, it came under pressure after yesterday’s trade data:
Chinese exports and
imports both came in lower than April, a sign of weak global growth
momentum and soft domestic demand. This sparked, once again, speculation of policy easing to come.
Yuan slid after the data:
but slumped further overnight in line with the losses described above. USD/CNH popped above up through 7.15
for the first time this year:
Keep an eye on the People’s Bank of China CNY reference rate setting today. The Bank has been following along readily with the declining yuan but too sharp a pace of fall risks the PBOC striking back to stabilise the yuan, for a few days at least. The setting is at 0115 GMT (2115 US Eastern time).
—
ps.
- USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate.
- CNH is the offshore yuan. USD /CNH has no restrictions on its trading range.
- A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.