London — Risk-sensitive currencies such as the Australian dollar and Chinese yuan soared on Wednesday after Chinese real estate giant Evergrande announced that it would pay yuan-denominated coupons, and the safe yen eased slightly, Relieved the imminent concern of the default.
But some of the excitement was confused after traders realized they were still unsure if they could pay the coupons on the offshore dollar bonds scheduled for Thursday.
The Australian dollar rose 0.49 percent to $ 0.7268, after which it abandoned some of its profits and traded at $ 0.7247, up 0.2 percent on the day. The yen depreciated by about 0.2% to $ 109.43, with little reaction to the Bank of Japan’s decision to suspend policy.
In a note to clients, ING said, “Risk assets are in calm waters this morning as the People’s Bank of China injects additional liquidity into the banking system through a reverse repo contract due to the resumption of the Chinese market after a four-day vacation. We are sailing. “
“It was also news that Evergrande had negotiated interest payments on 5.8% of 2025 bonds by tomorrow, which helped limit the loss of Chinese equities. As a result, U.S. equity futures are positive. Showing open, the FX market was dominated by risk-on moves this morning as commodity currencies rise against safe havens. “
Bloomberg reported that investors are still nervous about the fate of Evergrande, who missed the interest payments to be paid to at least two of the biggest bank creditors on Monday.
In London’s early trading, the dollar index was 93.226, not far from Monday’s monthly high of 93.455.
It stabilized at a monthly low of $ 1.1700 on Monday and the euro barely rose at $ 1.1725.
Previously, the safe Japanese currency was supported by a cautious mood, and the common currency fell to a seven-month low of 127.93 yen.
The yuan has been fairly stable, with offshore trading slightly firm to 6.4748 per dollar, down from the monthly low of 6.4878 set on Monday.
Fed lift off
Another major focus of the day is the Federal Reserve Board of Governors, which is expected to give further hints to future policy paths, such as when to start tapering bond purchases and when to start raising interest rates. I am.
Central banks are expected to show plans to begin cutting large-scale bond purchases in November if the incoming data holds up.
The so-called “dot plot”, which graphs policy makers’ economic and interest rate forecasts, could provide clues as to when the Fed will raise interest rates from its current near-zero level.
Saxo Bank Chief Investment Officer Steen Jakobsen said: ..
“This suggests that there are few expectations for a surprise at today’s FOMC meeting, and the Fed is unlikely to change current expectations, so temporary inflation and more than expected. Low August CPI data. “
Within recent limits, the 10-year Treasury yield traded at 1.3260%.
Elsewhere, the Canadian dollar remained largely unchanged, holding back profits made on Tuesday after Justin Trudeau’s Liberal Party won a fiercely contested election.
Cryptocurrencies bounced back a bit after plunging in the previous session.
Bitcoin rose 5% to $ 42,754 after hitting a one-and-a-half-month low of $ 39,573. Ether rose 6% to $ 2,950, down to $ 2,732, down more than 30% from its peak hit in the first four months of the month.
The United States announced on Tuesday sanctions on crypto exchanges for its alleged role in allowing illegal payments from ransomware attacks.
By Ritvik Carvalho