Opening Bell: U.S. Futures, Europe Rally As China Rescues Ailing Yuan


  • U.S. futures, European stocks climb as global selloff eases
  • Yuan recovers as China moves to defend 7.000 level after U.S. names it “currency manipulator”
  • Yields, dollar pare losses
  • Safe havens yen, gold pull back; oil gains ground
  • Key Events

    Futures on the , and and edged higher this morning after Asian shares lingered in red territory but managed to bounce off their lows, as Chinese policymakers took action to limit the plunge.

    USD/CNY Monthly Chart

    The global decline eased after the People’s Bank of China set the daily currency fixing above the 7.000 red-line mark, whose breach yesterday—for the first time in ten years—sent a clear retaliatory signal to the U.S. administration, after President Donald Trump pressed ahead with a 10% tariff on $300 billion worth of remaining Chinese imports last week.

    The yuan’s tumble in turn prompted the U.S. Treasury Department to label its trade opponent a currency manipulator late on Monday.

    Technically, the renminbi is still weaker than the 7.000 level, and remains above the 200-month MA for the first time since 2007.

    In the early session, Asian markets stocks pared the selloff—but remained in red territory—after Chinese officials denied they would use the domestic currency as a trade war weapon.

    Australia’s (-2.44%) dropped for the fifth day, underperforming on the U.S.-Sino trade spat escalation. The Aussie benchmark missed on the opportunity to trim losses, closing before Chinese policymakers’ currency intervention. Meanwhile, the gained for the first time in twelve days after the Reserve Bank of Australia at record lows, as expected, and said it was reasonable to expect that “an extended period” of low rates will be required. Local bonds rallied, sending the yield below 1% for the first time on record.

    Elsewhere, Japan’s (-0.65%) hit a 7-month low.

    Global Financial Affairs

    Yields on Treasurys partly reversed a drop but remained close to their lowest level since Oct. 2016, which the so-called Trump Trade on Monday.

    DXY Daily Chart

    The also reduced losses to almost flat, confirming the channel bottom since late June, guarded by the 50 and the 100 DMA.

    XAU Daily Chart

    XAU Daily Chart

    In a mirror image, gave up gains after an upside breakout to an ascending triangle, which had taken it to the highest price since Apr. 2013.

    The also pulled back after closing at its strongest level in more than one year on Monday.

    edged higher, recovering from the U.S.-China trade tit-for-tat, which threatened to deal a further blow to global growth and thereby to global fuel demand. The U.S. declared a fully-fledged economic embargo against Venezuela, helping prices higher.

    advanced, with its week-long rally taking the digital token above $12,000 on Tuesday for the first time in three weeks. Technically, the digital coin is breaching its falling channel.

    Up Ahead

  • Central banks posting their monthly rate decisions include and .
    • A string of FOMC voting members speaks this week, including St. Louis’s on Tuesday and Chicago’s on Wednesday.

    Market Moves

    Stocks

    • The U.K.’s slid 0.4% to the lowest in two months.
    • Germany’s climbed 0.3%.
    • The dropped 0.8% to the lowest in almost seven months.

    Currencies

    • The Dollar Index was little changed, rebounding from a 0.32 drop.
    • The was little changed at $1.12.
    • The edged 0.3% higher to $1.2174.
    • The Japanese yen declined 0.6% to 106.63 per dollar.
    • The onshore yuan gained 0.2% to 7.036 per dollar, the biggest increase in more than three weeks.

    Bonds

    • The yield on 10-year Treasurys ticked five basis points higher to 1.75%, the biggest increase in more than three weeks.
    • Britain’s yield climbed one basis point to 0.52%, the first advance in more than a week.
    • Germany’s yield fell less than one basis point to -0.52%, reaching the lowest on record with its eighth straight decline.

    Commodities

    • Gold dropped 0.2% to $1,460.40 an ounce.
    • West Texas Intermediate crude climbed 0.7% to $55.10 a barrel.



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