Please use symbol entry at top right of page to search

FOREX-Yuan rallies on hopes of China COVID policy relief, euro surges

By Harish Sridharan and Joice Alves

Nov 29 (Reuters) - The yuan jumped against the dollar on Tuesday amid hopes of a potential easing in the country's strict pandemic restrictions following an unprecedented episode of unrest.

The euro rose ahead of inflation data due on Wednesday.

China will speed up COVID-19 vaccinations for elderly people, health officials said on Tuesday, aiming to overcome a key stumbling block in efforts to ease unpopular "zero-COVID" curbs.

The offshore yuan surged 0.9% to 7.1850 a dollar. The onshore yuan was up 0.6% at 7.1666 per dollar.

"People are getting quite excited about some sort of reopening," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

The U.S. dollar, which rallied in the previous session on mounting worries over China's COVID-19 situation, fell 0.4% to 106.19.

The Aussie, often used as a liquid proxy for the yuan, rose 1.2% to $0.6734. The kiwi similarly gained 1.3% to $0.6239.

Risk-sensitive sterling strengthened 0.7% to $1.2043. The Japanese yen last traded about 0.75% higher at 138.19 per dollar.

Police on Monday stopped and searched people at the sites of weekend protests in Shanghai and Beijing, after crowds there and in other Chinese cities demonstrated against the country's strict zero-COVID policy.

Protests have spread to at least a dozen cities around the world in a show of solidarity.


The euro was up 0.4% at $1.0380, not far from a five-month peak of $1.0497 hit on Monday.

European Central Bank President Christine Lagarde said overnight that euro zone inflation had not peaked and it risked turning out even higher than currently expected, hinting at a series of interest rate hikes ahead.

Flash euro zone inflation figures for November are due on Wednesday, with economists polled by Reuters expecting inflation to come in at 10.4% year-on-year.

Ahead of that, figures showed on Monday that Spain's consumer prices in the 12 months to November rose 6.8%, a slower pace than the previous 7.3% figure marked in October. Inflation numbers from Germany are expected later on Tuesday.

"The consensus is for German headline inflation to stabilise at 10.4% and eurozone figures to slow slightly tomorrow," said Francesco Pesole, FX strategist at ING.

"It's difficult to see this significantly altering the ECB's narrative, but an above-consensus print may prompt markets to seriously consider a 75 basis point hike in December".

The greenback remained marginally supported by hawkish Federal Reserve speakers overnight.

St. Louis Fed President James Bullard said the Fed needed to raise interest rates quite a bit further, while New York Fed President John Williams and Richmond Fed President Thomas Barkin echoed similar views.

Comments from Fed Chair Jerome Powell on Wednesday will be watched for new signals on further tightening, with key U.S. jobs data for November due on Friday. The U.S. central bank is widely expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14.

(Reporting by Harish Sridharan in Bengaluru and Joice Alves in London; Editing by William Maclean)

Copyright © Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

Search News

Filter Results

Publication Date
  • All

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.