USD extended its downward trend against major currencies as the Fed reiterates its loose monetary policy on Tuesday. US Treasury yield also fell to multi-week lows, with the 10-year bill falling to 1.56%. The latest data on US consumer confidence show that, the figure hovers at 14-month high in May as job market looks optimistic. The housing market, on the other hand, is showing signs of slowdown. New home sales dropped in April mainly due to supply constraints.
In contrast to USD, the onshore Yuan (CNY) is getting attention. It has risen to the highest point against USD since 2018, going as far as 6.3925 during Tuesday’s session in Asia. China’s major state-owned banks were busy buying dollars at around 6.40 in order to cool down CNY. China is still largely reliant on the weakness of its local currency to support the economy through exporting goods abroad. Therefore, if CNY appreciates too fast, exports may be negatively impacted.