China won’t devalue yuan to boost exports

Jul 25, 2018, 02:13
China won’t devalue yuan to boost exports

Trump's remarks on Friday, coupled with new threats to slap duties on all US imports from China, triggered sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings.

The New Zealand dollar fell as mounting speculation the Bank of Japan will adjust its extraordinary stimulus programme drove up United States government bond yields and as Chinese authorities added more support to lenders. "If it's a tariff-only story, then for the time being it's still dollar-positive", because China and the euro region have more to lose than the U.S.in such an environment.

The Bank of Japan, facing stubbornly low inflation, is in unusually active discussions before this month's policy decision, with changes to its interest-rate targets and stock-buying techniques on the table, people familiar with the central bank's thinking told Reuters.

It was last down 0.2% at 94.27, the lowest in more than two weeks.

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Their growing confidence in the USA currency does fly in the face of history, which shows that a full-blown trade war typically causes dollar weakness in the end. The U.S. currency was 0.37 percent weaker than the 111.4 handle seen at the end of Friday trade in NY.

The New Zealand bonds closed Monday's session on a lower note amid a muted trading session that witnessed data of no major economic significance.

Gold prices rose further on Monday as the dollar eased to its lowest in almost two weeks after US President Donald Trump criticised the Federal Reserve's interest rate tightening policy.

The Treasury secretary pointed out several sectors where US sales to China could rise, including energy, agricultural products and technology.

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Oil edged down after prices increased at the end of last week, with analysts saying concerns about the trade dispute were to blame for the dip.

Shrugging off the weaker yuan, China's stock markets rose as investors cheered the prospect of policy easing and picked up bargains.

Chinese shares also opened lower but quickly reversed their losses, with both the blue-chip index and Shanghai's SSE composite up a touch.

Trump, on Friday, lamented the recent strength of the United States dollar and accused the European Union and China of manipulating their currencies. They also said that China's financial markets had higher expectations for easing monetary policy as signs of economic slowdown emerged.

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"China has a large, growing population that will consume more products" and that likes American products, he said, while cautioning that USA companies shouldn't be pressured to share their technology. The European currency traded 0.1 percent down at 1.1710, having touched a high of 1.1749, its highest since July 11. Gold may capitalize on the dollar's weakness if trade tensions put the currency under additional downward pressure.

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