Yuan Tumbles To 1-year Low Against Euro; Falls From 3-1/2 Month High Against Dollar

The Chinese yuan tumbled to a 1-year low against its European counterpart during Thursday's early trading. Against the dollar, the Chinese currency fell from a 3-1/2 month high.

The Chinese yuan that jumped to a 3 1/2 -month high of 6.8260 against the U.S. dollar at 8:55 pm ET Wednesday slipped thereafter. The yuan dropped to 6.8295 per dollar by about 11:40 pm ET. If the Chinese currency falls further, it may target the 6.8335 level. The dollar-yuan pair closed yesterday's North American session at 6.8262.

The People's Bank of China has set today's central parity rate for the dollar-yuan pair is 6.8272. The pair is allowed to strengthen or weaken 0.5% from the parity rate.

From U.S., a report on housing starts, is slated to be released at 8:30 am ET. Economists estimate housing starts of 580,000 for August.

At the same time, the Labor Department is due to release its customary jobless claims report for the week ended September 12th. Economists expect a modest increase in claims to 555,000.

The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of 8 for September.

In early trading on Wednesday, the Chinese yuan slid to its lowest level since September 25, 2008 against the euro. The yuan touched 10.0568 versus the euro, with 10.12 seen as the next downside target level. At Wednesday's New York session close, the pair was quoted at 10.0503.

The People's Bank of China has set today's central parity rate for the euro-yuan pair at 10.042.

In the European session, the Eurozone trade balance and construction output reports are expected.

Yesterday, the Ministry of Commerce reported that the Foreign Direct Investment in China increased in August after declining for ten straight months. FDI rose 7% to US$7.5 billion in August. In July, investment had declined 35.7%.

During January to August, investment dropped 17.5% from the prior year to US$55.86 billion. For January to July period, FDI had decreased 20.3%.

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