Investors flock to hedges after USD drops in Asia amid concerns over US fiscal policy and central bank credibility.
Bitcoin and gold surged in Asian trading as the USD fell sharply, driven by investor concerns over US fiscal credibility and potential currency debasement. The PBOC set the USD/CNY reference rate at 6.7817, above the estimated 6.7262, signaling further yuan weakness.
The move follows warnings from Goldman Sachs and Citi about long-term USD debasement risks, with commodities like gold and Bitcoin seen as scarcity hedges. Japan’s core CPI held at 1.8% y/y in July, matching expectations, while BOJ policymakers eye a September rate hike to 1.25% amid broadening inflation pressures.
Markets also reacted to geopolitical tensions, including Iran’s plans to disrupt oil supplies ahead of US midterms, and Panama Canal transit caps due to El Niño. New Zealand’s trade deficit widened to NZ$-1.95 billion in July, underscoring regional economic strains.