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investingLive Asia-Pacific FX news wrap: Onshore yuan continues stronger
Key Takeaways (30s Read)
The onshore yuan continues to strengthen while the Australian dollar shows modest recovery.
The Asia session has revealed several economic data points showing new trends. In New Zealand, food price inflation has decreased month-on-month, indicating a potential easing in inflation indicators, although it remains elevated year-on-year. This decline could materially impact the CPI.
Additionally, fiscal projections from New Zealand indicate no return to a budget surplus for the next five years due to weak growth and high debt, leading to a heavier NZD.
In Australia, the S&P Global Flash Composite PMI eased to 51.1, which is a seven-month low yet still above the 50 expansion threshold. This decline is attributed to heightened competition and softer export growth, particularly affecting the services sector.
Conversely, the manufacturing sector showed resilience with a PMI increase to 52.2. Analysts from Commonwealth Bank and National Australia Bank expect a cash rate hike from the RBA in early February 2026. Consequently, AUD/USD dipped below 0.6620 before bouncing back to 0.6635.
The USD/JPY briefly traded below 154.75, reflecting a unique market response. Japan's PMI shows modest growth amidst ongoing manufacturing weakness. The People's Bank of China set the USD/CNY reference rate above model estimates, yet the market still pushed lower, indicating mixed signals across the Asia-Pacific region.
AI Analyst
AI Opinion
"The Asia session has brought forth important economic data, particularly from New Zealand and Australia, which is worth noting. The decline in food price inflation may have a favorable impact on the NZ market. The global economic environment remains highly uncertain, especially regarding U.S. interest rate policies and China's growth targets, which could influence currency movements. Thus, the AUD and NZD should be closely monitored. Moreover, actions from the People's Bank of China and Japan's economic indicators may have ripple effects on the markets in the Asia region, necessitating active trading strategies. In the short term, it is essential to assess how inflation and interest rate forecasts will impact the market amidst ongoing trade tensions with the U.S."
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