Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Gold Price Hits Seven-Week High as Fed Rate Hike Bets Fade and Hormuz Deal Hopes Grow 
US Stock Futures Hold Steady as Iran Hormuz Deal and Earnings Shape Market Sentiment 
US Stock Futures Rise as Markets Await July Payrolls Data 
Gold Prices Surge 7% as Dollar Falls, Fed Rate Hike Bets Ease 
Asian Stocks Slip as AI Rally Fades, Oil Holds Steady on Iran Peace Deal Hopes 
Asian Stocks Slide as Semiconductor Selloff Weighs on South Korea and Japan 
Trump Unveils $3 Billion U.S. Critical Minerals Push 
The USD/CNY and USD/CNH would trade towards 6.80 and then 6.70 should the US and China agree to resuming their bilateral trade negotiations in the third quarter of this year, according to the latest research report from Scotiabank.
Weak recent US macro data including the NFP job report have raised the odds of future Fed monetary easing, with Fed Funds Futures now pricing in a 26 bp rate cut at the July 30-31 FOMC meeting.
The Powell Put, the market’s insurance that the Fed will act to stimulate the markets if necessary, is expected to weigh on the DXY Index with falling 10Y UST yield, while improving risk sentiment in US stock markets and bringing a temporary relief to EM Asian currencies if the yuan is stable.
PBoC Governor Yi Gang said in an exclusive interview with Bloomberg on Friday that China has "tremendous" room to adjust monetary policy including interest rates and RRR if the trade war with the US deepens. Yi’s comments suggested further downside potential for the onshore yuan interest rates and China’s government bond yields, the report added.
Governor Yi Gang also told Bloomberg that no "numerical number" is more important than another when asked if there’s a red line for the yuan exchange rate. According to Governor Yi, the recent yuan weakness is attributable to "the tremendous pressure from the US side" amid simmering US-China trade tensions.
After former PBoC Governor Zhou Xiaochuan said on May 27 that the number 7 doesn’t mean much for the yuan exchange rate, we have seen increasing talks circulated in the onshore market in order to downplay the necessity of defending the 7 mark.
"We believe the PBoC’s stance and developments in the US-China trade talks will continue driving the yuan exchange rate in the foreseeable future. USD/CNY and USD/CNH are expected to remain relatively steady in the run-up to the G-20 Osaka Summit set for June 28-29, with China’s central bank keeping USD/CNY fixing below 6.9," Scotiabank further commented in the report.
