Precise Investors Editorial Team
The USD/CNY pair and offshore USD/CNH were little changed, the Australian and New Zealand dollars were broadly steady, while USD/SGD was little changed
Most Asian currencies traded in narrow ranges on Wednesday as investors remained cautious amid escalating tensions in the Middle East, with stronger-than-expected Chinese economic data doing little to spark broader demand for currencies.
China’s latest economic data painted a mixed picture. The world’s second-largest economy expanded 4.3% year-on-year in the second quarter, missing expectations, while industrial production increased 5.3% in June and retail sales rose 1.0%, both comfortably beating forecasts. The unemployment rate eased to 5.0%, pointing to improving consumer demand even as broader growth moderated.
The USD/CNY pair and offshore USD/CNH were little changed.
Lynn Song, Chief Economist for Greater China at ING, said the yuan and offshore yuan have been the only currencies in ING’s monitored basket to appreciate against the U.S. dollar since tensions between Iran and U.S. escalated, reflecting the currency’s relative resilience during periods of broad dollar strength. He cautioned, however, that increasingly bullish market positioning could limit further gains unless new catalysts emerge.
The USD/KRW pair traded around 1,491, with the won showing only a modest recovery even as the KOSPI rebounded almost 7% from Monday’s sharp selloff.
The Australian and New Zealand dollars were also broadly steady. USD/AUD edged lower after recent domestic data pointed to improving business confidence but still-subdued consumer sentiment, while USD/NZD remained near recent lows.
Francesco Pesole, FX Strategist at ING, said the New Zealand dollar has been the strongest-performing G10 currency since the latest escalation in Middle East tensions as investors continue rewarding central banks with scope for further tightening. He added, however, that markets may already be pricing an aggressive path for additional Reserve Bank of New Zealand tightening ahead of next week’s inflation data.
USD/SGD was little changed, while USD/INR edged higher ahead of India’s trade balance and wholesale inflation data due later in the day.
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