Chinese Chip Stocks Jump as Apple Reportedly Tests CXMT Memory Chips for China Devices 
Fed Chair Kevin Warsh Launches Task Forces to Overhaul U.S. Monetary Policy Framework 
China Inflation Cools in June as Producer Prices Hit Four-Year High 
Dollar Slips After Fed Minutes as Iran Tensions, Inflation Risks Keep Markets Cautious 
US Stock Futures Steady as Oil Prices Ease, Iran Talks Boost Market Sentiment 
Asian Stocks Slip as AI Chip Valuation Fears, Rising Oil Prices Weigh on Markets 
Japan Eyes Bigger GPIF Investment in Domestic Assets as BOJ Independence Concerns Grow 
Bernstein Raises 2026 Nickel Price Forecast as Indonesia Tightens Supply 
US Back-to-School Spending Seen Falling as Families Focus on Essentials 
Iran Targets U.S. Bases in Bahrain, Kuwait as Hormuz Conflict Escalates and Oil Prices Jump 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
The CNH surged in the past two sessions on account of two consecutive lower-than-expected USD/CNY fixings, soaring CNH funding costs, a Bloomberg report on the PBoC’s contingency plans and rushed long-dollar position unwinding in the market.
However, the surge is expected not to sustain in the near term prior to U.S. President-elect Donald Trump’s press conference and inauguration set for 11 January and 20 January respectively. the yuan to depreciate about 5% versus the dollar this year as the downward pressure extends into 2017 amid market worries over potential political and trade conflicts between the U.S. and China, Scotiabank reported.
The PBoC set its daily reference rate at 6.9498 and 6.9526 respectively on Tuesday and Wednesday, much lower than the corresponding estimate of 6.9612 and 6.9605. The move could curb escalating one-way expectation of yuan depreciation, discourage Chinese household from purchasing foreign currency despite an annual reset of the USD 50,000 quota in January and prepare scope for future yuan depreciation in the months ahead.
In addition, USD/CNH spot will trade at a premium to onshore spot most of the time in the coming weeks as current inverted onshore-offshore spot gap will normalize before long.
Further, offshore yuan liquidity conditions are likely to ease somewhat but remain relatively tight ahead of Chinese New Year to deter speculation on the yuan depreciation. Moody’s said yesterday that it will look at negative outlook on China’s sovereign rating this year.
Meanwhile, USD/CNY traded at 6.91, up 0.31 percent, while at 6:00GMT, the FxWirePro's Hourly Yuan Strength Index remained highly bullish at 111.46 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
