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The Greenback bounces sharply following China's Yuan official fixing by the PBOC

USD - United States Dollar

It might be a relatively a quiet day on the economic data front, with U.S. job openings data to be released at 10:00 a.m. After that, St. Louis Fed President James Bullard will be the central-bank speaker at noon today. The U.S dollar index is bouncing by around 0.35 percent this morning, following China's Yuan official fixing by the PBOC. However, it plunged over 0.70 percent in yesterday’s trading session.

Equity markets melted down around the world and pulled the U.S. dollar lower yesterday. China waited for Monday to maximize its market impact and responded to Trump's tariff threat made last week by letting the Yuan weaken and stopping imports of American agricultural products. However, after that, the bounce in risky assets came back. China's Yuan stabilized following an official fixing, which was set stronger than expected. The PBOC set its Yuan daily reference rate at 6.9683 per dollar, stronger than the 6.9871 forecast from a Bloomberg survey of traders. Experts say that Chinese officials needed to avoid capital flight.

The U.S. Treasury Department had officially labeled China a currency manipulator after the PBOC allowed the USD/CNH pair to cross above 7.00 (weaker Yuan) in retaliation for new tariffs on its imports. Of course, Trump reacted in a series of tweets, accusing China of “currency manipulation,” which, "…will greatly weaken China over time!" He called on the Fed to respond.

Some Fed officials were concerned over the equity selloff. Governor Lael Brainard said, "I am certainly monitoring developments very closely," adding that the central bank remains, "…committed to sustaining the expansion." Kansas City's Esther George said, "…the best I think that you can do right now is to monitor and see how that unfolds. "

Key Movers

In the U.K., Jeremy Corbyn warned he'd call a vote of no-confidence in the U.K. government when Parliament returns in September to prevent the new PM from taking Britain out of the EU without a deal. Johnson, meanwhile, said another election is the "last thing" he wants.

In Australia, the RBA left its cash rate at 1 percent, as expected, and said rates should stay low to reduce unemployment and make progress toward its inflation target. The RBA also introduced some official forward guidance that, "…an extended period of low-interest rates will be required. "

According to Bloomberg, “The race to the bottom for interest rates is on.” Markets are now pricing in more than 400 basis points of cuts from the Fed, ECB, BOJ and other global central banks.

Expected Ranges

USD/CAD: 1.3171 - 1.3231 ▲

EUR/USD: 1.1111 - 1.1219 ▼

GBP/USD: 1.2119 - 1.2266 ▲

AUD/USD: 0.6757 - 0.6812 ▲

NZD/USD: 0.6512 - 0.6602 ▲