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CNY reference rate steady as China CPI rises 1.5% YoY

7/10/2017, 11:08:27 AMTrading Strategies
CNY reference rate steady as China CPI rises 1.5% YoY

 The People's Bank of China kept the yuan stable on Monday morning after the country reported year-over-year inflation data that met expectations.

The PBOC set the yuan's reference rate at 6.7964 against a basket of currencies compared to the 6.7914 it set on Friday. The PBOC has not undertaken any market operations for 12 days running.

Meanwhile, China reported that the Consumer Price Index rose 1.5% year-on-year in June, meeting expectation,s while the Producer Price Index rose 5.5%.

In Japan, the yen gained ahead of China prices data and after Japan reported a narrower current account surplus than seen

The US Dollar Index, which measures the greenbackís strength against a trade-weighted basket of six major currencies, was up 0.02% to 95.80.

Earlier, Japan reported its unadjusted currenct account surplus at •1.654 trillion, narrower than the •1.796 trillion seen, while core machinery orders fell 3.6% on year in May, compared to a gain of 7.7% seen. USD/JPY changed hands at 113.98, up 0.06%.

In the week ahead, investors will focus on Fed Chair Janet Yellen's testimony on monetary policy as well as U.S. data on inflation and retail sales, due out on Friday, and trade data from China on Thursday.

Last week, the dollar rose against a basket of the other major currencies on Friday after data showing that the U.S. economy created jobs at a robust pace last month supported expectations for a third hike by the Federal Reserve this year.

The U.S. economy added 222,000 jobs last month the Labor Department reported, more than the 179,000 new jobs expected by economists.

Figures for April and May were also revised to show that 47,000 more jobs were created than previously reported.

The unemployment rate ticked up to 4.4% from a 16-year low of 4.3% in May, as more people looked for work, a sign of confidence in the labor market.

But wage growth continued to lag, with wage inflation growing by an annualized 2.5% in June, below forecasts for 2.6%.

The dollar initially fell against the yen amid concerns over the inflation implications of the weak wage growth data, before rebounding amid optimism over the strong headline number.

The rapid pace of jobs growth reassured investors that the economy is on a strong enough footing to justify the Fedís plans to raise interest rates once more this year.

The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has raised doubts over whether officials will be able to stick to their planned tightening path.