As reported by Bloomberg, Bank of New York Mellon’s Simon Derrick, the bank’s Chief Currency Strategist, is noting that a continued dovish shift to the US Federal Reserve’s rhetoric could see pressure relax on the Chinese Yuan.
Key quotes
A recent dovish shift in tone from top Federal Reserve officials could be enough to relieve pressure on China’s yuan, which has begun to claw back some ground after dropping to a decade low last month.
“Much as in January 2016, it is entirely possible that this change in tone from the Fed might be enough to relieve the pressure” on the onshore yuan, he wrote in a note Thursday. “Indeed, this may already be happening,” he said, noting that dollar-yuan non-deliverable forward outrights have been making a series of lower highs since the start of the month.
It is arguable that Powell’s comments last week in conversation with fellow policy maker Robert Kaplan provided the “first tentative signal” that a so-called “Fed put” remains in place, Derrick wrote, referring to the idea that the U.S. central bank can step in to provide relief during severe market downturns.
Share
