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14 Aug 2015
Assessing the aftermath of the PBoC moves – Deutsche Bank
FXStreet (Edinburgh) - Jim Reid, Analyst at Deutsche Bank, has reviewed the consequences of the recent PBoC moves.
Key Quotes
“So it feels like calm has broken out over the last 36 hours and the PBoC’s soothing words yesterday did seem to help support a better tone for the most part in markets”.
“Despite this, lasting damage has been done and it’s interesting to look at some of the more notable price movers since the start of the first fixing change for the Yuan this week”.
“Based on Monday's and Thursday's closing levels, over the period we’ve seen the onshore Yuan devalue 3.04% and the offshore Yuan fall 4.01%, both at the weakest levels since 2011”.
“Despite a slight recovery yesterday, that’s resulted in a reasonable sell-off across the Asia FX space with the Taiwanese Dollar (-1.81%), Malaysian Ringgit (-1.88%), Indonesian Rupiah (-1.60%), Korean Won (-0.91%) and Aussie Dollar (-0.71%) in particular some of the notable movers”.
“Some of the more China sensitive commodity markets have also been hard hit. WTI has dropped -6.07% in the period, while Brent has fallen -2.36%. Aluminum is -2.78% weaker and Copper has tumbled -2.34%. Gold is unsurprisingly one of the few outliers, bouncing +0.96%”.
“In equity markets meanwhile, we’ve seen a slight rise for the Shanghai Comp (+0.67%) although in truth it’s traded with little conviction, while other bourses in Asia have dropped including the Nikkei (-1.02%), Hang Seng (-2.05%) and Kospi (-0.98%)”.
“Some of the more impressive price moves has been in European equities, particularly the more core markets. The Stoxx 600 is down -3.28% over the period, while the DAX and CAC have tumbled -5.09% and -4.01% respectively. The peripherals are also down, but the moves less exaggerated with the IBEX and FTSE MIB -3.22% and -2.55% respectively. In the US the S&P 500 has been pretty choppy, but is down -0.99% this week still”.
“Despite the rebound yesterday, the moves have had a clear impact across the majority of markets. It doesn't feel like the full ramifications will be known for some time”.
Key Quotes
“So it feels like calm has broken out over the last 36 hours and the PBoC’s soothing words yesterday did seem to help support a better tone for the most part in markets”.
“Despite this, lasting damage has been done and it’s interesting to look at some of the more notable price movers since the start of the first fixing change for the Yuan this week”.
“Based on Monday's and Thursday's closing levels, over the period we’ve seen the onshore Yuan devalue 3.04% and the offshore Yuan fall 4.01%, both at the weakest levels since 2011”.
“Despite a slight recovery yesterday, that’s resulted in a reasonable sell-off across the Asia FX space with the Taiwanese Dollar (-1.81%), Malaysian Ringgit (-1.88%), Indonesian Rupiah (-1.60%), Korean Won (-0.91%) and Aussie Dollar (-0.71%) in particular some of the notable movers”.
“Some of the more China sensitive commodity markets have also been hard hit. WTI has dropped -6.07% in the period, while Brent has fallen -2.36%. Aluminum is -2.78% weaker and Copper has tumbled -2.34%. Gold is unsurprisingly one of the few outliers, bouncing +0.96%”.
“In equity markets meanwhile, we’ve seen a slight rise for the Shanghai Comp (+0.67%) although in truth it’s traded with little conviction, while other bourses in Asia have dropped including the Nikkei (-1.02%), Hang Seng (-2.05%) and Kospi (-0.98%)”.
“Some of the more impressive price moves has been in European equities, particularly the more core markets. The Stoxx 600 is down -3.28% over the period, while the DAX and CAC have tumbled -5.09% and -4.01% respectively. The peripherals are also down, but the moves less exaggerated with the IBEX and FTSE MIB -3.22% and -2.55% respectively. In the US the S&P 500 has been pretty choppy, but is down -0.99% this week still”.
“Despite the rebound yesterday, the moves have had a clear impact across the majority of markets. It doesn't feel like the full ramifications will be known for some time”.