Renminbi Weakens, Yen and AUD React to Market Shifts

Here’s this week’s overview of the Renminbi, Japanese Yen, and Australian Dollar:

Renminbi

In China, we saw the Renminbi weaken to 7.17 per USD last week as markets await key data releases in the coming week.

Traders are looking forward to statistics on year-over-year growth in outstanding loans, new Yuan loans, and the M2 money supply, all set to be released later on Monday.

Industrial production, retail sales, and the unemployment rate are also expected later in the week. This anticipation follows last week's reports that revealed a surprising acceleration in China's annual inflation rate, which surpassed market expectations to reach its highest level since February.

This marked the sixth consecutive month of rising price levels, signaling a sustained recovery in domestic demand due to Beijing's intensified stimulus efforts.

Japanese Yen

The Japanese Yen weakened against the Dollar to 146.8 last week following a highly volatile beginning to the month in equity markets.

Sentiment has since stabilised, with BOJ Deputy Governor Shinichi Uchida saying the central bank won’t raise rates further when the market is unstable.

Meanwhile, the summary of opinions from the BOJ’s July policy meeting revealed that some members called for the need to keep hiking rates, with one suggesting they should be brought eventually to at least 1%.

The exchange rate this week will likely be determined by inflation data out of the US. 

Australian Dollar

The Australian Dollar rebounded last week by 1.2% against the US Dollar to trade at 0.655 on Friday.

The RBA opted to hold rates steady at 4.35% and was surprisingly hawkish in its commentary. While expressing concerns about growth and employment due to the current market outlook, both growth and CPI outlooks were revised upwards.

Positive inflation data out of China also helped boost AUD later in the week. Consumer demand in China remains a concern, so more AUD volatility can be expected moving forwards.