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FOREX-Yuan, Aussie gains as China data offers hope

FOREX-Yuan, Aussie gains as China data offers hope
Representative image Image Credit: ANI

The Australian dollar and its emerging market counterparts gained on Friday as Chinese data showed pressure on the world's second-biggest economy may be starting to diminish, with the offshore yuan rising to a six-month high against the greenback. Though China's economy grew 6.0% in the December quarter from a year earlier, Beijing is widely expected to introduce more stimulus measures in 2020 while investment and demand remain sluggish. Chinese growth for all-2019 of 6.1% was the slowest in 29 years,

"December data signaled a strong finish for the Chinese economy and that suggests the Chinese economy may be primed for a rebound in 2020," said Lee Hardman, a currency strategist at MUFG in London. An index for emerging market currencies rose to its highest level since June 2018 while the Chinese currency in the offshore market rose 0.2% to 6.8636 yuan per dollar, its strongest level since July 2019.

"The Chinese data overnight offered some cause for optimism with the Phase 1 trade deal with the U.S. partially lifting the cloud of uncertainty hanging over the economy," said Craig Erlam, senior market analyst at OANDA. The Aussie is often traded as a liquid proxy for the Chinese yuan as the country's small, open economy is heavily reliant on exports to China.

The local dollar and it's New Zealand counterpart rose 0.2% against the dollar respectively. DOLLAR STURDY

But despite gains by emerging market currencies, the dollar held its ground against its rivals and was on track for a small weekly loss, with the dollar index tracking its strength against six of its major peers little changed at 97.31. Recent data has been mildly supportive of the greenback.

U.S. retail sales increased for a third straight month in December, and the number of Americans filing claims for unemployment benefits dropped for a fifth straight week last week, showing that the labor market remained strong. Elsewhere, the British pound weakened by 0.2% at $1.3050 after worse-than-expected December retail sales.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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