- Italian PM Renzi gets enough confidence votes
- Chinese yuan hits 4-month low, government wants increased flexibility
- New Zealand quarterly inflation expectations report due
Talk about a manic Monday! Major pairs were off to a busy start this week, with most movements spurred by currency-specific events. EUR/USD had a topsy-turvy day, as Italy’s new Prime Minister Renzi underwent a confidence vote among lawmakers. After a bit of choppiness and a few stronger than expected economic releases, the pair was able to keep its head above the 1.3700 handle.
As for U.S. data, the flash services PMI came in short of consensus, as the figure slipped from 56.7 to 52.7 instead of improving to 56.9. This sparked a selloff for the Greenback against the pound and the commodity currencies.
A few hours ago, the Wall Street Journal reported that the Chinese yuan hit a 4-month low on Monday, prompting traders to speculate that the trend is about to turn. This marked the second week of losses, as the PBoC seems inclined to reduce speculative gains for the currency. Bear in mind that further yuan depreciation typically weighs on other Asian currencies and emerging market assets.
Up ahead, the New Zealand quarterly inflation expectations report is up for release and it might show a weaker reading compared to the previous 2.3% figure. Also due in this Asian trading session is China’s CB leading index, which is expected to show a decline after printing a mere 0.4% uptick in the previous month. Take note though that stronger than expected results might boost risk appetite and push the commodity currencies higher. Stay on your toes!
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