By Peter Nurse
The yuan is slightly stronger on Thursday after the decision of China to reduce tariffs on some products imported from the United States, causing other currencies to rise against the dollar in a move to risk large but modest.
At 15h20, USD/CNY was trading at 6,9665, down 0.1%, back below the level of 7.0, while the US Dollar Index, which tracks the dollar against a basket of six other currencies, declined 0.1% to 98,13.
China said Thursday morning that it would reduce by half the customs duties on $ 75 billion of u.s. imports from the 14 February. This comes shortly after the two countries agreed to an interim trade agreement, putting an end to a trade dispute of long duration. This should contribute to improve the conditions of the second phase of the negotiations, which are generally considered to be more difficult.
The tariff cuts come at a time when China is trying to mitigate the economic damage caused by an outbreak of coronavirus, which has so far been over 560 deaths. The death toll has further increased to 14% on Thursday, according to the chinese authorities, continuing a slowdown a very gradual death.
Orders to German factories fell unexpectedly by 2.1% in December due to lower demand from other euro area countries. This is the largest decline since February and has eased the more positive mood generated by a number of surveys of confidence. It suggests that a recession in manufacturing would continue to hamper the overall growth of the largest economy of Europe.
Despite this publication, the euro remained unchanged against the dollar, with EUR/USD moving to 1,0997, after the president of the ECB, Christine Lagarde, has told the european Parliament that the ECB was facing a field of action is very limited. The british pound fell again against the greenback, with GBP/USD down 0.3% to 1,2963.
In Asia, the Reserve Bank of India has kept rates steady earlier Thursday, as expected, with its repo rate unchanged at 5.15% and its repo rate reverse to 4.9%.
The central bank has a difficult task ahead of it, because the inflation levels are already high but the economy is expected to grow by 5% in the year ending in march, its pace, the lowest in 11 years.
At 15.25, USD/INR was trading at 71,151, down 0.04%.
Always with the decisions on the rate, the Czech central bank should also maintain its benchmark interest rate unchanged, this time to 2%, for the sixth meeting in a row.
That said, this can be a decisions tight, as inflation rises at the fastest rate in seven years. But the concerns about the state of the global economy, in particular with regard to the onset of coronavirus in Asia, are likely to curtail the central bank.
At 15.25, the EUR/CZK was trading at social welfare; ” 24.92, down 0.6%.