FOREX-Dollar Holds Gains, Yuan Under Pressure As Evergrande Risks Rise

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Band Kevin Buckland

TOKYO, September 21 (Reuters)The offshore yuan wallowed near a nearly month-long low on Tuesday, as the safe-haven dollar and yen held firm as investors sought shelter from a possible China’s default to Evergrande.

The New Zealand dollar also fell after the deputy central bank governor poured cold water on bets for a 50 basis point rate hike next month.

The yuan CNH = D3 stood at 6.4805 to the dollar after weakening to 6.4879 on Monday for the first time since August 23. Continental markets are closed for holidays until Wednesday.

“It looks like the market was waiting for something from Chinese authorities this weekend to calm the markets and protect contagion concerns of an impending Evergrande default, and that did not happen,” Chris Weston , head of research at broker Pepperstone in Melbourne, wrote in a client note.

“Traders sense that a credit event is coming.”

Wells Fargo analysts expect the dollar to hit 6.60 yuan next month for the first time since November.

The US currency had already risen amid expectations that the Federal Reserve will signal the start of a cutback in stimulus measures at a two-day policy meeting that ends on Wednesday.

The greenback was broadly stable at $ 1.17245 per euro EUR = EBS after winning at $ 1.1700 overnight, also a first since August 23.

The yen fell around 0.2% to 128.50 against the single currency EURJPY = EBS, but still close to its high of 128.155 on Monday, a level not seen since August 20.

The dollar appreciated 0.18% to 109.58 yen JPY = EBS, cutting some of its losses overnight, but with the pair still snaking near the middle of the last and a half month’s trading range.

The Bank of Japan decides its policy on Wednesday, with no change expected from its massive stimulus program.

The dollar index = USD, which measures the currency against six major peers, was little changed at 93.2241 after rising overnight to 93.455 for the first time since August 23.

Market sentiment has been shaken by the potential contagion of Evergrande 3333.HK, which tries to raise funds to pay a multitude of lenders, suppliers and investors. A deadline for an interest payment of $ 83.5 million on one of its bonds is due Thursday, and the company has liabilities of $ 305 billion.

Chinese regulators on Monday warned that the company’s insolvency could fuel wider risks in the country’s financial system if it is not stabilized.

Moves to Hang Seng in Hong Kong .HSI could dictate the direction of the Australian dollar and other commodity-related currencies in the near term, Pepperstone’s Weston said.

The Australian AUD = D3 edged up 0.07% to $ 0.7258 after dipping to $ 0.72205 in the previous session for the first time since August 24.

New Zealand Kiwi NZD = D3 fell 0.3% to $ 0.7011, approaching Monday’s low of $ 0.7006, the lowest level this month. A 50 basis point hike in the RBNZ’s key rate seems unlikely after the text of a speech by Deputy Governor Christian Hawkesby hinted that the central bank would move in 25 basis point increments.

Sterling GBP = D3 was little changed at $ 1.3662 after slipping to a nearly one-month low at $ 1.3640 overnight. The Bank of England announced a political decision on Thursday.

The loonie recovered after hitting a one-month low at C $ 1.2896 CAD = D3 against his American counterpart overnight before national elections which could increase political uncertainty in Canada. The dollar slipped 0.15% to C $ 1.2805 in Asia.

Cryptocurrencies have also been affected by the reversal in risk sentiment, with bitcoin BTC = BTSP down more than 3% to about $ 41,700 on Tuesday after hitting $ 40,192.90 for the first time since August 6 earlier.

Smaller rival ether ETH = BTSP also slipped around 3% to $ 2,891.77, after dipping to $ 2,803.20, also a first since Aug. 6.

$ 1.1724

$ 1.1728

+1.1730

+1.1724

109.5900

109.4000

+109.5900

+0.0000

128.48

128.26

+128.5000

+128.2400

0.9279

0.9278

+0.9281

+0.9277

1.3654

1.3657

+1.3664

+1.3650

1.2801

1.2820

+1.2822

+1.2800

0.7257

0.7253

+0.7263

+0.7249

0.7008

0.7031

+0.7027

+0.7000

Global exchange rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Kevin Buckland; Editing by Sam Holmes)

((Kevin.B [email protected];))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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