RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 
Wall Street Futures Climb as Trump Signals Iran Deal Progress 
Dollar Weakens as Iran Peace Hopes Boost Risk Appetite and Yen Gains Strength 
Asian Currencies Rise as Middle East Tensions Ease, South Korean Won Surges After Inflation Data 
Asian Stocks Rally as Iran War Fears Ease and AI Boom Lifts South Korea 
Gold Prices Rise as Weak Dollar and Lower Oil Prices Boost Safe-Haven Demand 
Italy Services PMI Nears Stabilization as Middle East Tensions Push Costs Higher 
Japan Tech Stocks Surge as AI Optimism Lifts SoftBank, Chipmakers 
Oil Prices Rebound Slightly After Sharp Drop on Iran Deal Hopes 
Gold Prices Rise as Weaker Dollar and U.S.-Iran Peace Hopes Boost Demand 
The USD/CNY currency pair is expected to reach 6.85 by end of this year and 7.20 by end of 2017. However, the depreciation pressure will likely continue through next year as well, with the CNY anticipated to remain relative stable against a basket of currencies in the weeks ahead.
The People’s Bank of China (PBoC) raised USD/CNY fixing by 104 pips to 6.8796 last Friday amid a broadly strengthening USD. The central bank set the USD/CNY reference rate at 6.8985 on Monday, 0.27 percent weaker than 6.8796 last Friday, injecting CNY185 billion liquidity in reverse repos, including CNY15 billion in 28-day repos and CNY60 billion in 14-day repos.
Further, China’s economy will continue to face headwinds next year, Scotiabank reported. The National Bureau of Statistics (NBS) said Friday that China’s new home prices in the first-tier cities increased by just 0.5 percent in October from a month ago after rising 3.3 percent m/min September. It could be attributed to a recent round of property tightening measures.
"A rule-based and more market-oriented fixing formation mechanism enhances the PBoC’s capability to manage market expectations. In the rest of this year, we expect CFETS RMB Index to stay in a range with a soft support level of 94 to avoid fuelling market fears over competitive currency devaluations. In the event of a broadly strengthening dollar, CFETS RMB Index is more likely to rise as the PBoC will certainly step in to curb over-speculation about the yuan depreciation," Scotiabank commented in its latest research report.
Meanwhile, the Central Economic Work Conference, an annual tone-setting economic meeting attended by top Chinese leaders, will kick off in Beijing in December. The conference that is usually scheduled for 2-4 days will review China's economic progress in 2016, list major tasks for the year of 2017 and conclude with a statement. The leadership will set its annual growth target for next year at the meeting, but that figure won’t be disclosed until the NPC (China’s legislature) convenes in March 2017.
