Aussie Dollar Thumped by Devalued Yuan May Be a Mixed Blessing

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The Aussie dollar’s plunge to a six-year low may not be all good news for the Reserve Bank.

While the Australian central bank spent much of this year calling for a weaker currency to help revive the local economy, the Chinese move to devalue the yuan that sparked the most recent drop underscores the dangers posed by a slowdown in the South Pacific nation’s biggest trading partner. It also risks fueling beggar-thy-neighbor actions in other countries and putting the brakes on a normalization of U.S. monetary policy.

China’s surprise change to its currency regime on Tuesday rippled through global markets as investors speculated the move was timed to combat the deepest economic slowdown since 1990 for the world’s most populous nation. The Australian dollar dropped 10 percent this year to 73.68 U.S. cents as of 10:30 a.m. on Thursday in Sydney, having touched 72.16 cents on Wednesday, a level unseen since April 2009.

Source: Bloomberg

Gold Holds Rally as Yuan-Led Turmoil Reinvigorates Haven Demand

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Gold held the biggest one-day gain in three months on concern the market turmoil spurred by China’s devaluation may weaken currencies and delay the onset of higher U.S. interest rates, increasing demand.

Gold for immediate delivery was little changed at $1,124.50 an ounce at 7:52 a.m. in Singapore after rising 0.1 percent to $1,125.85, the highest since July 20, according to Bloomberg generic pricing. The metal rallied 1.4 percent on Wednesday, the most since May 13, capping a five-day rally.

Bullion is often used as an alternative store of value, and tends to rise when currencies slump. China’s decision on Tuesday to weaken its currency may boost the chances of competitive devaluations, reinvigorating gold’s allure a prices dropped to the lowest level since 2010 last month. The dollar dropped on Wednesday as traders pared bets that the U.S. Federal Reserve will start raising interest rates from next month.

Silver for immediate delivery traded at $15.55 an ounce from $15.546 on Wednesday, when prices capped five days of gains. Spot platinum was little changed at $1,000.35 an ounce after rising 1.4 percent on Wednesday, while palladium dropped 0.3 percent to $625.30 an ounce after a 4.4 percent surge.

Source: Bloomberg

Asian Stocks Fall for a Third Day as Investors Weigh Yuan Impact

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Asian stocks fell for a third day, with the regional benchmark index extending a seven-month low, as investors continued to weigh the impact of China’s shock currency devaluation.

The MSCI Asia Pacific Index dropped 0.2 percent to 138.05 as of 9:02 a.m. in Tokyo. U.S. stocks reversed losses in Wednesday trading as the greenback’s retreat sparked a rebound in some commodities. Concern the yuan’s devaluation will sap inflation globally threw the outlook for higher U.S. interest rates into question, sinking the dollar. The yuan climbed 0.7 percent in Hong Kong following a two-day rout.

Japan’s Topix index slid 0.3 percent while South Korea’s Kospi index fell 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent and New Zealand’s NZX 50 Index slid 0.2 percent. Markets in Hong Kong and China have yet to open.

The Shanghai Composite Index slipped 1.1 percent on Wednesday, while the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong fell 2 percent. Data showed China’s industrial production, investment and retail data all trailed analysts estimates, putting additional downward pressure on an already weakening currency.

Source: Bloomberg

Japan Topix Index Falls for Third Day as Investors Watch Yuan

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Japan’s Topix index fell for a third day as investors await further developments from China after two days of yuan devaluations triggered a sell-off in global stock markets.

The Topix lost 0.2 percent to 1,661.79 as of 9:02 a.m. in Tokyo, after falling the most in a month on Wednesday. The Nikkei 225 Stock Average added 0.2 percent to 20,429.71. The yen strengthened for a third day against the yuan in offshore trading ahead of Thursday’s setting of the Chinese currency’s reference rate. The yen also rose against the dollar on Wednesday.

The Chinese currency’s devaluation has roiled markets for two days, with European stocks dropping on Wednesday by the most since October, on concern the slowdown in Asia’s largest economy could be worse than previously thought. U.S. stocks reversed losses late Wednesday as a weaker dollar spurred a rebound in commodity prices.

China’s decision to devalue the yuan and shift to a more market-determined reference rate sparked concern the move would sap inflation globally, throwing the outlook for higher U.S. interest rates into question and causing a selloff in the dollar. The odds of a September interest-rate hike by the Federal Reserve fell to about 42 percent, from 54 percent as recently as Aug. 7, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent after the underlying measure erased a 1.5 percent decline to close 0.1 percent higher on Wednesday in New York. Commodity-related stocks led gains after the greenback’s retreat ignited a rebound in prices for some raw materials.

Japanese machine orders rose 16.6 percent from a year earlier in June, less than the 17.6 percent gain estimated by economists, a government report showed Thursday.

Source: Bloomberg

Indeks S&P 500 Hapus Kerugian Seiring Meredanya Kecemasan Atas China

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Indeks S&P 500 hapus penurunan sebesar 1.5 persen seiring para investor kembali ke saham Amerika ditengah aksi sell-off saham global dipicu oleh kejutan kebijakan pemerintah China yang mendevaluasi mata uangnya. Emas reli sementara dolar terdepresiasi.

Indeks S&P 500 berakhir mendatar pada pukul 16:00 di New York, rebound pasca merosot tajam dibawah moving average 200 hari dan sedikit menghapus keuntungan tahun ini. Rebound saham Eropa sedikit terlambat yang anjlok sebesar 2.7 persen, penurunan terbesar sejak Oktober lalu. Yuan China pimpin pelemahan mata uang Asia dan saham-saham emerging market anjlok ke level terendahnya sejak 2011 lalu.

Dolar melemah karena investor berspekulasi bahwa devaluasi yuan akan memperlambat inflasi global. Yang memungkinkan Federal Reserve akan menunda menaikkan suku bunganya, sementara mata uang AS melemah mendorong daya tarik beberapa komoditas. (izr)

Sumber: Bloomberg