Shenzhen testing new digital currency with 10m yuan 'red packet' lottery

A central bank digital currency could take the form of a token saved on a physical device like a mobile phone or a pre-paid card. Getty Images

USA stocks climbed to the highest in nearly six weeks amid a rally in giant technology companies as traders awaited earnings from banks and news on a fresh round of economic stimulus.

"If capital is moving on relative growth rates, then China is looking quite attractive", said Chris Weston, head of research brokerage Pepperstone in Melbourne. "It is also increasing the centrality of Asia - and particularly, of China".

A recovering economy, a hefty yield premium in sovereign debt over Treasuries and the prospect of a US presidential victory by Democrat nominee Joe Biden are all providing tailwinds for a currency that earlier this year was near its lowest level since 2008.

Governments worldwide are all expanding efforts to explore digital currency possibilities including, most recently, the Bank of Japan which said it would start testing its own electronic yen in April next year.

The People's Bank of China has scrapped a requirement for banks to hold a reserve of yuan forward contracts, removing a guard against depreciation.

JPMorgan and Citigroup will kick off the third-quarter earnings season on Tuesday, followed by Goldman Sachs, Bank of America and Wells Fargo on Wednesday and Morgan Stanley on Thursday.

Tabas Strickland, of the National Bank of Australia, said the yuan's move may have been driven by a change in the rules "that it (lowering the (Chinese yuan)) is less costly and signaling less (concern) about currency weakness". It last sat at 6.7487 per dollar in onshore trade.

The yuan is up more than 7% since late May and had shot higher on Friday as investors wagered that a Joe Biden presidency would drive smoother Sino-U.S. relations.

US Election 2020: Anthony Fauci says Trump campaign ad quote misleading
" I can't imagine that anybody could be doing more ", Fauci is shown as saying, creating the impression he is referring to Trump. He also bristled when asked in a July interview with The New York Times whether the Biden campaign had been in touch with him.

USA markets are also gearing up for the earnings season.

And the People's Bank of China announced in its statement that the next step will be to maintain the flexibility of the RMB exchange rate and the stability of market expectations, in order to maintain the stability of the RMB exchange rate mainly at an adaptive and balanced level.

The euro fell 0.2% to $1.1806.

Apart from that, the China-trade sensitive Australian Dollar fell 0.4 per cent and the bloc's common currency had wrapped up the day 0.18 per cent lower to $1.1810 against its American peer.

Oil prices also slipped after a force majeure at Libya's largest oilfield lifted, a Norwegian strike affecting production ended and USA producers began restoring output after Hurricane Delta.

Gold held steep Friday gains at $1,929 an ounce.

US voters are getting their first close look at Judge Amy Coney Barrett in hearings that began Monday and are all but certain to lead to President Donald Trump's Supreme Court nominee being placed on the high court just days before the election.

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