Risk assets were giving a helping hand during the Asian session yesterday when PBoC set the daily FIX lower for the second consecutive session. However not before too long USDCNH (Yuan traded in Hong Kong) saw a notable depreciation and traders quickly suspected Beijing were intervening to weaken CNH to close the gap between CNY and CNH. At the end of NY session CNH had depreciated 1.47% and CNY 0.42%.
Market movements were essentially a complete reversal of what had been seen leading up to this week; risk assets stopped declining and safe hvaens lost their appeal. However the magnitude of moves were a far cry from the panic which set the tones last week, with modest bounces happenig across most market.
- USD equities saw marginal gains but compared to the heavy losses sustained recently, certainly nothing to celebrate just yet.
- Gold, after regaining its title as a safe haven, closed down for the second consecutive session and confirmed an Evening Star formation and now trades below $1100.
- AUDUSD made a rebound after stopping just 23 pips above the September lows and making an intraday break back above 70c. It is now the fourth consecutive close below the lower Bollinger Band and having respected the 7-yer low support and forming a spinning top (indecision candle) then a temporary bottom could be about to form.
- USDCAD broke to new multi-year high after housing start were at their lowest since March '15 and the quarterly business outlook survey wqhich showed hiring intentions have dropped over the next 12 months.
- The Baltic Dry Index, which track the price of shipping raw materials internationally, hits a 30yr low to add further weight to global growth concerns.
Nylon Handover: Intervention sends USDCNH tumbling
In a single session USDCNH lost the year's gains as Beijing are suspected to have sent a signal to speculators to back off of the offshore Yuan.