Data released by the People’s Bank of China on Friday showed that the total amount of foreign currency deposits in and outside the country rose by nearly 40 billion U.S. dollars in January, marking the largest monthly increase since April 2021. The data indicated that both residents and non-financial enterprises increased such savings.
The Bank of China has repeatedly lowered deposit interest rates, making high-yield foreign currencies more attractive to investors. Chinese citizens may also start to exchange foreign currencies in 2025, as their limit is 50,000 US dollars and it is reset at the beginning of each year.
Song Lin, chief economist for the Greater China region at ABN AMRO, said that foreign currency deposits tend to increase seasonally at the beginning of the year. “After Trump won the US election, market concerns over the depreciation of the RMB significantly intensified. Therefore, the increase in foreign currency deposits starting from December reflects this trend.”
He said that against the backdrop of current optimism about Chinese technology, the general weakening of the US dollar and the ongoing negotiations between the US and Russia over Ukraine, “it will be interesting to see if the data for February continues to rise.”
Driven by the breakthroughs in DeepSeek’s artificial intelligence technology, the Chinese stock market has become a favorite among fund managers, leading to capital outflows from emerging markets. Nomura Securities stated that the renewed optimism towards China has diminished the appeal of the Indian stock market. Concerns over the weakening rupee, slowing economic growth, banking sector liquidity, and the risk of Trump’s tariffs have kept investors on edge. Unless one or more of these issues improve, foreign investment inflows into India may remain sluggish.
Christopher Waller, a member of the Federal Reserve Board, said that the latest economic data support keeping interest rates unchanged, but if inflation behaves as it did in 2024, policymakers might “at some point this year” consider cutting rates again.
Waller said in a speech in Sydney on Tuesday: “If the winter lull this year is only temporary, as it was last year, then further easing of policy would be appropriate. But until the situation becomes clearer, I tend to keep the policy rate unchanged.”
The Federal Reserve cut interest rates by one percentage point in the final months of 2024 and then kept them unchanged at its January policy meeting. New data shows that the consumer price index rose by 0.5% in January, the biggest increase since August 2023, suggesting that the decision was correct.
Waller said the data released last week was “slightly disappointing”, but he emphasized that the forecast for the personal consumption expenditures price index, the inflation gauge favored by the Fed, was not so worrying.
The estimated figures he cited were that the core PCE, excluding food and energy, might have risen by about 0.25% in January and increased by 2.6% compared with the same period last year.
Technical analysis:
Gold: Yesterday, the US market was on holiday and the gold market closed early. As a result, the price fluctuated around the 2900 mark. The green low-buy position we showed in the plugin yesterday was at 2888, which almost perfectly matched the day’s low point. Today, we will continue to watch for a signal of a rebound and stabilization at the 2900 mark, and then attempt a buy operation. For detailed positions, please consult the plugin.
(15-minute Gold Chart)
If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
Crude oil: The buy stop operation we arranged in the blue area yesterday can achieve a certain effect. Although the price fluctuated at that position, it eventually broke through to the 71.30 level after the struggle. Today, we will continue to look for a buying opportunity through a momentum break or wait for the emergence of the latest demand zone. For detailed positions, please consult the plugin.
(15-minute crude oil chart)
If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
GBP/USD: Yesterday, the buy stop operation we arranged after the blue momentum area was broken through was relatively successful overall. After the price broke through the 1.26 mark, it rose to above 1.2630 at its highest point. Today, the price has returned to the 1.26 area to seek confirmation of support. It is recommended to wait for the emergence of a new demand zone before attempting another buy operation. For detailed positions, please consult the plugin.
(GBP/USD 15-minute chart)
If you want to experience the same plug-in as shown in the picture, please contact V: Hana-fgfg.
Today’s key financial data and events to focus on:
18:00 Eurozone February ZEW Economic Sentiment Index
21:30 Canada January Core Consumer Price Index
21:30 US New York Fed Manufacturing Index for February
23:00 US February NAHB Housing Market Index
At 23:20, Mary Daly, the president of the Federal Reserve Bank of San Francisco, will deliver a speech.
