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The Chinese yuan and the Aussie were the stars of the Asian session, as an even lower fixing raised concerns about China’s economic stability.

  • Japan’s national core CPI (y/y) up by 0.8% as expected vs. 0.7% previous
  • Japan’s all industries activity up by 0.1% vs. 0.0% expected, 1.0% previous
  • New Zealand’s credit card spending (y/y) jumps by 5.7% vs. 3.7% uptick in May

Major Events/Reports:

Yuan weakness = currency war in the making?

The biggest story of the hour is the Chinese yuan dropping to more than its one-year lows against the Greenback.

The People’s Bank of China (PBoC) set its yuan mid-point reference rate at 6.7671, which is higher than yesterday’s 6.7066 figure and marks the SEVENTH consecutive day that the central bank had weakened the currency.

Offshore yuan dropped to as low as 6.8358 per dollar – its lowest level since June 27, 2017 – before large, state-owned banks sold some Greenback to control the losses.

The yuan’s recent sharp losses sparked concerns over the stability of world’s second-largest economy. And with Trump talking down the Greenback in the previous session, market bees are buzzing that currencies will be the next hot issue in the ongoing U.S.-trade war.

Mixed market sentiment

Asian session market players were a bit spooked by the yuan’s sharp losses and took some risks off the table.

  • Nikkei is down by 0.62% to 22,624.1
  • ASX 200 is up by 0.40% to 6,286.2
  • Shanghai index is down by 0.12% to 2,769.200
  • Hang Seng is down by 0.54% to 27,858.2

Safe-haven gold didn’t get a bullish momentum, though, likely because the Greenback was seeing some retracement after Trump low key jawboned the currency.

  • Gold is down by 0.29% to $1,219.13
  • Brent crude oil is up by 0.17% to $72.63
  • U.S. WTI is down by 1.93% to $68.11

Major Market Mover(s):

AUD

Most traders consider the high-yielding Aussie as the stand-in for the yuan, so the comdoll took some hits during a relatively light trading session.

AUD/JPY is down by 10 pips (-0.12%) to 82.62; AUD/CAD is down by 8 pips (-0.08%) to .9753; EUR/AUD is up by 19 pips (+0.12%) to 1.5842; GBP/AUD is up by 16 pips (+0.09%) to 1.7704, and AUD/NZD is down by 9 pips (-0.08%) to 1.0897.

NZD

Kiwi bulls shrugged off the news, though, and focused on reclaiming pips that they’ve lost in the previous trading sessions.

NZD/USD is up by 8 pips (+0.12%) to .6749; NZD/CHF is up by 10 pips (+0.15%) to .6745, and NZD/CAD is up by 6 pips (+0.06%) to .8951.

CHF

Interestingly, the low-yielding franc didn’t get much support in a slightly risk-averse trading environment.

EUR/CHF is up by 10 pips (+0.09%) to 1.1642; CHF/JPY is down by 13 pips (-0.11%) to 112.42; CAD/CHF is up by 7 pips (+0.09%) to .7534, and GBP/CHF is up by 11 pips (+0.08%) to 1.3011.

Watch Out For:

  • 6:00 am GMT: Germany’s PPI (0.3% expected, 0.5% previous)
  • 8:00 am GMT: Euro Zone’s current account (27.2B EUR expected, 28.4B EUR previous)
  • 8:30 am GMT: U.K.’s public sector borrowing (3.6B GBP expected, 3.4B GBP previous)