Chinese Yuan Declines, While Dollar Has Modest gains

The dollar is rising but very slowly.

In October, the profits of China’s industrial firms shrank at their fastest pace in eight months. This was shown in the official data on Wednesday. In the world’s second-largest economy, slowing momentum exists.

The weakness of China’s yuan strengthens the case for deeper monetary easing, so the yuan is steady. Per greenback, it traded at 7.0291.

Bill Evans, the chief economist of Westpac Bank in Australia, anticipates quantitative easing (QE) and two central bank interest rate cuts. He thinks it will happen next year.

Philip Lowe, Governor of the Reserve Bank of Australia, said on Tuesday he does not expect to use QE, but it can be an option if rates will fall from the current 0.75% to 0.25%.

The Reserve Bank of Australia is ready to cut the cash rate down if there will be no other choice, said Bill Evans.

For now, the Australian dollar fell 0.2% to $0.6774. Pre-Thanksgiving holiday slows down the trade.

The Bond Market and FX market are not in the game anymore. Nevertheless, the equity markets are waiting for the positive outcome of the trade deal. They push on and believe trade talks will end ideally.

The market is tired of phase one negotiations, says Ray Attrill, head of FX strategy.

The U.S. Dollar

The dollar is fetching $1.1012 per euro and $1.2853 per pound. It is a slight change but still noticeable. The dollar against the yen traded at 109.12. It seems from the Washington and Beijing negotiations the greenback found support.

As actuality shows, the dollar has modest gains. It’s interesting what will happen if phase one concludes.

But the fact that the United States President Donald Trump supported the protesters in Hong Kong might delay the agreement of the phase one deal. It can postpone the agreement at least until the following weekend. Some economists and traders anticipate that phase one negotiations will not end until the next year.