China Slows Yuan Drop, Currency Wars, Next BOE Chief: Eco Day

(Bloomberg) --

Welcome to Tuesday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• China took steps to slow the yuan’s descent as the effects of Monday’s tumble continued to weigh on markets. The People’s Bank of China set the daily currency fixing stronger than analysts expected and announced the planned sale of yuan-denominated bonds in Hong Kong
• Hours earlier the Trump administration formally labeled China a currency manipulator, further escalating the trade war. It’s about five years late on the designation, writes Tom Orlik
• The yuan’s plunge past 7 per dollar -- long seen as a line in the sand -- shows the possibility of Beijing dumping its $1.1 trillion pile of Treasuries can’t be ruled out, says Stephen Roach, a senior lecturer at Yale University. The yuan’s slide threatens to revive concerns about capital flight
• Chinese state media stuck to the government’s line on the yuan’s weakening, saying the move was normal while stressing the economic benefit of some flexibility in the currency
• The latest U.S.-China salvos open up a new front the world’s central banks must contend with: a currency war
• The Fed will be leaning closer to reducing rates again next month after President Donald Trump ratcheted up his trade war. But whether that gives Trump a weaker dollar is far from certain. On another note, four former Federal Reserve chiefs made a joint plea for the central bank to be able to operate without political pressures or the threat of removal of its leaders
• German factory orders rebounded more than expected, after an onslaught of bad news coming out of Europe’s largest economy
• Boris Johnson’s government has just been presented with a novel idea for the next head of the Bank of England: pick a woman
• Australia kept interest rates unchanged Tuesday following back-to-back cuts that, combined with a massive escalation in the U.S.-China economic battle, helped push the currency to its lowest level in a decade
• The richest people in the U.K. are overwhelmingly middle-aged men living in London and the southeast, according to new analysis published Tuesday.

To contact the reporter on this story: Anirban Nag in Mumbai at anag8@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karthikeyan Sundaram, Pradeep Kurup

©2019 Bloomberg L.P.