FxPro Financial Services Ltd | Nov 27, 2020 05:11AM ET
Indices in Japan and Hong Kong are cautiously moving upwards against the backdrop of dollar pressure against Asian and Oceanian currencies. In general, markets are moderately positive and markets these regions are experiencing a stronger inflow, in anticipation of a smaller downturn and a rapid recovery.
We have previously seen strong employment growth in Australia and a jump in retail sales in New Zealand, encouraging demand for local currency and markets.
Easier inflation strengthens expectations of new monetary policy easing or the extension of existing QE programmes. This pushes bond prices upwards, creating retail and institutional investors out of them and feeding demand for foreign assets and shares of domestic companies. In turn, this is causing a very moderate growth in yen vs dollar, compared to its retreat against a wide range of peers since early November.
From June to mid-November, we saw an equally rapid advance of the Chinese yuan. Its growth against the dollar has stagnated at 6.50. Investors are starting to fear that China will restrain currency growth, which is harming export competitiveness and inflates prices on financial assets.
The FxPro Analyst Team
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