Chinese Yuan Under Pressure to Stay Low

It is expected that a grim growth prospect of the Chinese Yuan, according to the latest research report from Commerzbank.

After the introduction of the main loan rate (LPR), the new benchmark loan rate, the Chinese central bank will publish a fixed rate on the 20th day of each month. The LPR consists of two components, namely a flat rate (one year MLF rate) and a credit premium.


The PBoC maintained the MLF rate at 3.3 per cent earlier this week, suggesting a reduction in the credit premium, which is charged by commercial banks if LPR is reduced.

The market now has the right to see a 5-10bps cut to LPR this week, giving reasons including economic slowdown and a global mitigation background.

“To be dissatisfied, even if the PBo delivers such an amount, the market is unlikely to be satisfied as the consensus is at the heart of Chinas. But, because the focus is on financial stability by Chinese policy makers. , it is difficult to see an incredible PBoC now, “said Commerzbank further in the report.

US Industrial Growth

It is planned that industrial production data will be released for August later today. The effects of slowing global growth and the ongoing trading war are evident in the manufacturing sector. Total industrial production fell by 0.2 per cent in the previous month, with manufacturing output mainly falling by 0.4 per cent.

As trade negotiations have increased and the ISM manufacturing index has fallen in the curtilage territory for the first time since 2016, it is unlikely that major conditions in the factory sector will come back in the coming months, and be noted. Wells Fargo in a research report. Industrial production is projected to fall by 0.1 per cent in August.

Mining production decreased by 1.8 per cent in the previous month. Commodity prices have significantly reduced the sector and are likely to continue production. Oil and gas production has been a major result in recent years.

“The number of colors declining steadily in 2019 reflects the withdrawal of capital expenditure across the sector caused by last year’s sharp decline in oil prices,” added by Wells Fargo.

Watching Gold

Gold is trading in a narrow range and markets eye US Fed policy meeting for further direction. The yellow metal recovered sharply after the escalation of geopolitical tensions in the Middle East. It has jumped nearly 10 from an intraday low of $1493 and is trading around $1501.70.

US 10 year bond yield is trading higher in the US session and shown a jump of more than 2% from an intraday low of 1.80%. It is currently around 1.827%.

Major intraday support to be watched -$1486 and any break below targets $1475 (10– W MA)/$1469.Minor weakness only below $1469.

Resistance -The yellow metal is facing strong intraday resistance around $1510-12 and any break above targets $1525/$1540.

Additional Levels

$1469-76 (50- day MA and 55- day EMA)

$1445 (38.2% fib)


$1390 (38.2% fib)

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