Chinese Yuan rallied due to the hopes of economic recovery 

Chinese Yuan

The Chinese yuan held on to its big gains on Wednesday. The currency traded at 6.7835 per dollar after soaring as high as 6.7663 on Tuesday. Better-than-expected economic data boosted traders’ optimism, further assuring them that the country is leading the global recovery from the pandemic. 


On the other hand, the Australian dollar declined by 0.1% to $0.7294. The New Zealand dollar also fell slightly at $0.6708. 


The euro tumbled down to $1.1837. However, the Sterling rose from last week’s lows due to good jobs figures and opposition to a plan to breach the Brexit treaty. The Pound last traded at $1.2877 and 91.87 pence per euro.


Traders awaited the Fed’s decision and a news conference from Chairman Jerome Powell on Wednesday. They avoided sharp moves during the session. 


Besides policy, traders will likely focus on the Fed’s economic projections. The three to 3.5-year projection horizon would allow the agency to indicate how big an overshoot they think will be required to get to the 2% inflation target – stated Steve Englander, Standard Chartered’s head of FX research. 


How did the U.S. dollar fare?


The dollar found support on Wednesday, along with the Japanese yen. Rodrigo Catril, a senior currency analyst at National Australia Bank, stated ahead of the Fed’s meeting that there was a feeling in the market that the agency might try to act on its dovish tilt. Traders shifted positions ahead of a U.S. Federal Reserve policy decision, moving on risk-off currencies. 


There’s a risk there that the Fed doesn’t do much more than what it’s done already – noted Catril. The Yen buying reflects a belief that the bank may act on that stance. However, further stimulus may weaken the greenback again.


The Japanese currency traded at a two-week high of 105.26 per dollar on Wednesday. The dollar also rose higher against other majors, after rebounding from a Tuesday dip. Nonetheless, its moves in the morning trade were quite small.

  • Support
  • Platform
  • Spreads
  • Trading Instument

For more news updates, visit our homepage now and see our latest news article. Want to learn more about trading? Visit our education page now and learn for FREE!

Leave a Reply