The Chinese yuan continues to strengthen amid strong economic data

By JustMarkets 

The US stock market ended Friday’s session with a notable decline, driven primarily by the ongoing sell‑off in the technology sector. By the end of the day on Friday, the Dow Jones Index (US30) fell by 0.34% (weekly +0.46%). The S&P 500 Index (US500) dropped by 1.09% (weekly -1.97%). The Technology Index NASDAQ (US100) closed Friday in the red at 2.50% (weekly -5.22%). The epicenter of the sell‑off remained the semiconductor segment: chipmakers’ shares fell for the eighth consecutive session, marking the longest negative streak for the sector since the 2008 crisis. Nvidia shares declined by 1.4%, Micron by 5.6%, and AMD by 5.9%.

The upcoming week in the US will be marked by an intensification of the corporate earnings season amid a complete absence of comments from Federal Reserve speakers due to the “quiet period” ahead of the October meeting. Investors will focus on the financial results of major tech giants such as Meta, Tesla, IBM, and Texas Instruments to assess the return on investment in AI infrastructure. Elsewhere in the Americas, key events will include inflation releases that may influence the rate trajectory of local regulators. In Canada, monthly CPI growth is expected at 0.2%, with annual core inflation remaining at 2.6%. Together with upcoming retail sales and producer price data, this will shed light on the Bank of Canada’s next steps.

The Mexican peso (MXN) weakened to around 18.47 per US dollar, approaching an 11‑month low amid narrowing interest rate differentials between Mexico and the United States. High inflation readings in the US, where the annual Producer Price Index reached 6.3% and consumer inflation rose to 3.7%, strengthened expectations of continued Federal Reserve tightening. Meanwhile, minutes from the Bank of Mexico confirmed that most members of the Governing Board see room to continue cutting the key rate through the end of 2026 and into early 2027 amid slowing core inflation and weak domestic consumption.

In Europe, by the end of the day on Friday, Germany’s DAX (DE40) rose by 0.95% (weekly +1.65%), France’s CAC 40 (FR40) closed up 0.28% (weekly +1.66%), Spain’s IBEX 35 (ES35) gained 0.77% (weekly +0.21%), and the UK’s FTSE 100 (UK100) closed the trading session higher by 0.38% (weekly +3.13%). Next week, European markets will focus on the preliminary October block of leading business activity indicators (PMI), which will help assess the resilience of the European economy to high interest rates and energy shocks. Although the services and manufacturing sectors of the Eurozone are expected to remain in expansion territory, their growth rates are projected to slow slightly. A reversal of the five‑month upward trend and a decline in Germany’s ZEW Index are also expected, along with weakening Eurozone confidence indicators.

On Friday, the US natural gas (XNG) prices fell more than 3%, dropping to $3.11 per MMBtu and posting a weekly decline of about 3% after the previous 6% surge. Amid lingering effects of Hurricane Isaias, production shutdowns in the Gulf of Mexico, and pipeline issues, average output in the continental US in October stood at 110.8 bcfd, remaining below the record levels of late summer.

In Asia on Friday, Japan’s Nikkei 225 (JP225) rose by 1.39% (weekly -4.84%), China’s FTSE China 50 closed up 0.05% (weekly -2.45%), Hong Kong’s Hang Seng (HK50) gained 0.52% (weekly -1.02%), and Australia’s ASX 200 (AU200) closed Friday higher by 1.00% (weekly +0.76%).

The offshore yuan (CNY) strengthened to 6.69 per dollar, reaching its highest level since June 2022 amid a strong block of Chinese macroeconomic data for Q3. China’s GDP growth accelerated to 4.5% year‑over‑year, exceeding the market consensus (4.4%) and breaking the three‑year low of the previous quarter. Accompanying September indicators confirmed a recovery in business and consumer activity: industrial production growth rose to 5.5%, retail sales increased to 1.1%, and urban unemployment fell to 5.2%. Additional support for positive sentiment comes from expectations of speeches by People’s Bank of China (PBoC) leadership and financial regulators at the Financial Street Forum in Beijing.

The Australian dollar rebounded from multi‑month lows, returning to around $0.70 amid hawkish signals from the Reserve Bank of Australia. Although the RBA has already raised the key rate four times this year, bringing it to 4.6%, Assistant Governor Christopher Kent expressed doubts about the current level of monetary restriction. Rising estimates of global and domestic neutral interest rates indicate that current conditions exert less restraining pressure on demand and inflation than previously assumed, leaving the door open for further tightening of monetary policy.

S&P 500 (US500) 7,659.44 -84.62 (-1.09%)

Dow Jones (US30) 52,002.41 -175.28 (-0.34%)

DAX (DE40) 25,622.61 +239.99 (+0.95%)

FTSE 100 (UK100) 10,881.90 +41.55 (+0.38%)

USD Index 101.78 -0.28 (-0.28%)

News feed for: 2026.10.19

• New Zealand Trade Balance (q/q) at 00:45 (GMT+3) – NZD (MED)
• China GDP (q/q) at 05:00 (GMT+3) – CHA50, HK50 (MED)
• China Industrial Production (y/y) at 05:00 (GMT+3) – CHA50, HK50 (MED)
• China Retail Sales (y/y) at 05:00 (GMT+3) – CHA50, HK50 (MED)
• China Unemployment Rate (m/m) at 05:00 (GMT+3) – CHA50, HK50 (MED)
• Canada Consumer Price Index (m/m) at 15:30 (GMT+3) – CAD (HIGH)
• Canada BOC Business Outlook Survey at 18:30 (GMT+3) – CAD (MED)

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.