China Announces Steps To Support Growth Amid Rising Trade Tensions

by Frankie Norman July 25, 2018, 2:32
China Announces Steps To Support Growth Amid Rising Trade Tensions

Meanwhile, the People's Bank of China injected 502 billion yuan into its market through a medium-term lending facility, giving Chinese lenders greater liquidity by letting them borrow from the central bank. It fell to its weakest since July 11 earlier in the session. This list attracted much criticism from various US industry groups.

At a weekend meeting in Buenos Aires, finance ministers and central bank governors from the world's 20 largest economies called for stepped-up dialogue to prevent trade and geopolitical tensions from hurting growth.

On Friday morning, the yuan fell to 6.7943 CNY for one United States dollar, down 0.28% from the previous day, and then slightly recovered to close to 6.78 CNY at the end of the day, generating rumors that the central bank to intervene in the foreign exchange market. In commodities, oil prices were held back by concerns over US-China trade tensions.

"At the moment, we don't know what kind of pressure or comments could come from the USA side", said Osamu Takashima, head of G10 FX strategy, Japan at Citigroup Global Markets Japan. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped almost 2-1/2 basis points to 2.83 percent, the yield on the long-term 20-year note also surged 2-1/2 basis points to 3.13 percent and the yield on short-term 2-year closed 1-1/2 basis points higher at 1.86 percent.

The long-awaited wealth management rules, released on Friday, aim to push banks to standardize their wealth management businesses and to invest wealth-management product funds into the capital markets in a compliant way.

Stock markets rallied Tuesday, helped by Chinese stimulus plans and some strong corporate earnings, traders said. The dollar index went as deep as 94.207 on Monday, the lowest in more than two weeks.

The Reuters report and the dollar's weakness together added to the yen's strength, which was last up 0.5 percent at 110.91 per dollar. As it stands, the USD/CNY is trading around the 6.75 mark, seemingly on its way to the 7.00 handle last seen in January 2017.

Gold prices declined as the greenback rebounded from near 2-week lows, as markets continued to price in a strong, steady rate hike path for the US Federal Reserve.

Trump said in a Twitter message "China, the European Union and others have been manipulating their currencies and interest rates lower, while the United States is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge. Tolerance is higher. Investors thought that the 6.7 per dollar was the floor, then 6.8, now both are gone", said a trader at a foreign bank in Shanghai.

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