LONDON, Sept. 22 (Reuters) – Risk-sensitive currencies such as the Australian dollar and Chinese yuan surged and the safe haven yen eased slightly on Wednesday after Chinese real estate giant Evergrande (3333.HK) reported that he would make a next bond coupon in yuan. payment, allaying immediate fears of default.
However, some of the excitement died down after traders realized it was still unclear whether the developer would be able to pay the coupon on its offshore dollar bonds, due Thursday. Read more
The Australian dollar rose 0.49% to $ 0.7268 before giving up some of the gains to trade at $ 0.7247, up 0.2% on the day. The yen weakened about 0.2% to 109.43 per dollar, showing little reaction to the Bank of Japan’s decision to keep its policy on hold. Read more
“Risk assets are sailing calmer waters this morning, as the reopening of Chinese markets after a four-day vacation saw the People’s Bank of China inject additional liquidity into the banking system through take-over deals. pension “, said ING in a note to clients.
“Also helped limit losses on Chinese equities, news that Evergrande has negotiated an interest payment on its 5.8% 2025 bond due tomorrow. As a result, US equity futures are showing a positive opening and the forex market has seen dominance of risk moves with commodity currencies gaining against safe havens this morning. “
Investors are still concerned about the fate of Evergrande, which failed to pay interest owed Monday to at least two of its largest bank creditors, Bloomberg reported. Read more
The dollar index stood at 93.226 at the start of trading in London, remaining close to Monday’s one-month high of 93.455.
The euro barely moved at $ 1.1725, after leveling off at a one-month low of $ 1.1700 on Monday.
Earlier, the common currency fell to a seven-month low of 127.93 yen, as the safe haven Japanese currency was supported by the cautious mood.
The Chinese yuan was fairly stable, strengthening slightly to 6.4748 per dollar in offshore trading, falling from the one-month low of 6.4878 set on Monday.
LIFTING THE FEED
Another major focus for the day is the US Federal Reserve, which is expected to give more guidance on its future political direction, including when to start cutting bond purchases and when to start raising interest rates. Read more
There are rising expectations that the central bank will signal its intention to start cutting back on its massive bond purchases in November if the incoming data holds.
The so-called “dot plot”, which plots the economic and rate projections of policymakers, could offer clues as to when the Fed will raise interest rates from the current near zero level.
“Longer-term US Treasury yields continue to wrap around a very tight range and the Fed’s expectations have remained neutral for weeks, with neither moving particularly on recent asset market volatility. risky, ”said Steen Jakobsen, chief investment officer at Saxo Bank. .
“This suggests little anticipation of a surprise at today’s FOMC meeting and keeps the bar rather low for a hawkish surprise scenario, as the Fed was seen as unlikely to change current expectations,” with Jackson Hole’s conciliatory speech from Fed Chairman Powell on transient inflation and weaker than expected August CPI data. “
The 10-year US Treasury yields traded at 1.3260%, within recent ranges.
Elsewhere, the Canadian dollar was little changed, slashing gains on Tuesday after Prime Minister Justin Trudeau’s Liberals won a hotly contested election. Read more
Cryptocurrencies rebounded a bit after the plunges of the previous session.
Bitcoin rose 5% to $ 42,754 after hitting a low of $ 39,573 in 1.5 months. Ether rebounded 6% to $ 2,950, after falling to $ 2,732, down more than 30% from a four-month high reached earlier this month.
The United States on Tuesday unveiled sanctions against a cryptocurrency exchange for its alleged role in activating illegal payments from ransomware attacks. Read more
Reporting by Ritvik Carvalho; Editing by Catherine Evans
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