By: DailyForex.com
After the latest intervention by the People’s Bank of China which sent the Chinese Yuan significantly higher, especially in offshore trade, demand for safe haven currencies eased off. The Yen had initially touched on a multi-month high against the Dollar but retreated on news of the PBOC’s most recent fixing. The Aussie Dollar also pulled away from a 4-month trough against the greenback; many view the Aussie as a sound proxy for sentiment in China given the status as a key trading partner.
As reported at 10:44 am (GMT) in London, the USD/JPY was trading at 117.6045 Yen, a gain of 0.70%; the pair had hit a session trough of 116.70 Yen, a price not seen since last summer. The EUR/USD was trading at $1.0896, a gain of 0.23%; the pair has ranged from a session low of $1.0872 and a high of $1.0946.
Traders Wary of More Intervention
Because market players are still exceedingly wary of any further movements from the PBOC, especially given the precarious situation of the Chinese economy, safe haven currencies are expected to see increased demand as volatility arises. Further, analysts caution that there continues to be some uncertainty over Beijing’s FX policy as there seems to be little consistency as to their intervention efforts.