US Dollar Hits 18-Month High as Fed Signals More Rate Hikes 
Gold Prices Rise as Hormuz Tensions Fuel Inflation Risks 
European Stocks Fall as Oil Rises Ahead of Fed Minutes 
Mike Rogers Calls for End to US-Canada Tariff War 
Wall Street Falls as Oil Prices Rise and Tech Stocks Slide 
US Stock Futures Flat as Fed Minutes, Earnings Loom 
Dollar Near 18-Month High as Euro, Yen and Pound Weaken 
Best Gold Stocks to Buy Now: AABB, GOLD, GDX 
US Treasury Yields Ease After Strong 10-Year Auction as Global Bonds Struggle 
Asian Currencies Steady as Dollar Eyes Fourth Weekly Gain 
Gold Prices Fall as Fed Signals Another Rate Hike 
Deere, CNH and AGCO Stocks Fall as FTC Launches Farm Equipment Probe 
Add as a preferred source on Google
The EUR is expected to advance against the USD this year, while an increase in the EUR’s weighting could lead to a bigger rise in the CNY to ensure a steady yuan versus the basket, according to the latest research report from Scotiabank.
China’s factory activity expanded for the second straight month in December, with rising output sub-index and dipping new orders sub-index. The nation’s official manufacturing PMI came in unchanged at 50.2 in December, compared to market expectations for 50.1.
Further, the output sub-index rose to a 16-month high of 53.2, while the new orders sub-index dipped slightly to 51.2 from 51.3 in November. More importantly, easing trade tensions with the US lifted the new export orders sub-index above the 50 threshold for the first time since May 2018.
China is expected to implement more stimulus measures in addition to a 50 bp RRR cut effective from 6 January to further boost credit supply and revive economic growth, the report added.
Further reductions in the rate of the 7-day reverse repos, 1-year MLF and 1-year LPR would pull down the front-end CNY IRS/NDIRS, while steepening the curve in the run-up to the Chinese New Year (25 January).
On the FX side, the PBoC has been setting USD/CNY in line with market expectations since mid-October. The yuan is expected to advance moderately in the coming weeks, catching up with recent gains in regional peers such as the KRW and TWD.
"We maintain our short USD/CNH position amid sustained risk appetite arising from easing trade tensions with the US and the PBoC’s monetary easing measures," Scotiabank further commented in the report.
