ForexLive Asia-Pacific FX news wrap: PBoC slashes the CNY reference rate

Late
in the North American afternoon markets awaited any news out of Iran
on its views on an agreement on renewing the nuclear deal. All we got
were unnamed sources saying progress had been made (I’m
paraphrasing). We got nothing concrete to indicate a deal would (or
would not) be reached. The latest is that Iran has returned the
proposal to the EU negotiators; with headlines cautiously optimistic.
We are accustomed to this saga dragging on and on though, and so it
will. Oil dropped a little in price but did not trouble its Monday’s
lows and has since retraced to be little changed on the session so
far.

The
People’s Bank of China cut the CNY (ie a higher USD/CNY) in its
daily reference rate setting. As was expected. There was nothing of
substance out of China regarding further stimulus moves to come.
ICYMI the Bank sets its one- and five-year loan prime rates (LPR) on
Monday coming (the 22^nd).
A cut is expected given the cut to the MLF on Monday (see Monday’s
Asia Wrap for more on this if needed).

The
Reserve Bank of Australia published its August meeting minutes,
reiterating the interest rate path ahead is not preset.

Turning
to forex rates. USD/JPY dipped briefly under 133.00./ As I post its
traded back towards 133.50 and is now circa 133.35 and a touch
stronger on the session.

AUD/USD dipped to 0.7000 on conjecture the PBOC was to cut the CNY rate but once the reference rate setting was out of the way the Australian dollar recovered its small losses and has gained on the day. NZD/USD traded a similar pattern, as did cable and EUR/USD but in smaller ranges.

Oil: