Post-Christmas Market Turmoil: Renminbi Surges Past 7, Precious Metals Reach Historic Highs

The Renminbi’s Surge Surprises, Year-End Settlement Power Boosts Momentum

As the Christmas holiday approaches its end, major global exchanges have suspended trading one after another. The US stock market, Hong Kong stocks, and European markets have all closed for the holiday, yet the market remains lively. Instead, in an environment of sparse trading volume, the upward momentum of the Renminbi against the US dollar has become increasingly evident.

On Thursday (December 25), offshore Renminbi (CNH) against the US dollar broke through a significant level, reaching a high of 6.9960 during trading, the first time in months to break the 7.0 mark. Onshore Renminbi (CNY) fell to 7.0051, hitting a new low since May 2023. Market traders generally indicate that year-end corporate and institutional settlement demands are strong, coinciding with a lack of rebound momentum in the external dollar, creating a perfect storm for Renminbi appreciation. One trader bluntly stated, “Settlement orders are piling up, and the foreign exchange market’s dollar is also showing weakness. The consensus to go long on the Renminbi is quite strong.”

Recent analysis from institutions suggests that the People’s Bank of China (PBOC) has frequently switched between “enhancing exchange rate resilience” and “maintaining exchange rate flexibility” in its recent statements. This change in strategic wording hints that the central bank leans toward gradually strengthening the Renminbi but also aims to avoid rapid appreciation that could excessively impact exports. The institution further forecasts that the Renminbi will appreciate to 6.95, 6.90, and 6.85 against the dollar in 3, 6, and 12 months respectively.

It is worth noting that while Renminbi appreciation benefits importers and holders of foreign currency assets, it also puts pressure on export-oriented economies. The Taiwanese dollar, facing similar appreciation challenges, has recently also appreciated, adversely affecting Taiwanese exporters and becoming another market focus.

Gold and Silver Break Through, Setting New Records

The precious metals market has delivered remarkable performance. On Friday (December 26), gold temporarily broke through the $4,500 level, reaching a high of $4,504; silver also surged to $73.67, both hitting historic highs.

This rally reflects not only the reality of a weakening dollar but also an adjustment in investor expectations for the global economic outlook. As the Renminbi appreciates and the dollar remains under pressure, the appeal of gold as a traditional safe-haven asset has further increased, continuously attracting capital inflows.

Central Bank Policies Continue to Adjust, Global Currency Environment Changes

The Federal Reserve’s policy outlook is shifting. Market analysis institutions predict that the Fed will cut interest rates twice in June and July 2026, and forecast the 10-year US Treasury yield will fall back to the 4% to 4.25% range by the end of the year, with further downward potential. A relatively loose lending environment is expected to form, but it will not reach the ultra-low interest rate levels of the past.

Bank of Japan Governor Ueda Kazuo stated that Japan’s core inflation is steadily approaching the 2% target, and the central bank is prepared to continue raising interest rates. He pointed out that structural changes in the labor market are creating upward pressure on wages that are difficult to reverse, and companies are passing on rising costs across various sectors. Japan has thus formed a mechanism where wages and inflation rise in tandem. Given that real interest rates remain low, the Bank will continue to raise rates depending on economic improvement.

The Japanese government’s new fiscal year budget plan also signals a commitment to fiscal discipline. The budget starting April 2026 totals approximately 122.3 trillion yen, a record high since the initial budget, but new bond issuance will be controlled at 29.6 trillion yen, the second consecutive year below 30 trillion yen. The debt dependency ratio will decrease from 24.9% to 24.2%. This is the first time in 27 years that Japan has kept its debt dependency ratio below 30%, reflecting a careful balance between promoting growth and maintaining fiscal stability.

Optimistic Outlook for Tech Industry, Semiconductor Market Enters Trillion-Yen Era

The semiconductor industry outlook remains optimistic. Several analysis institutions forecast that global semiconductor sales will grow by 30% in 2026, surpassing the $1 trillion mark for the first time. Leading companies with high-margin structures and solid market positions will be focal points for capital allocation, with NVIDIA, Broadcom, Lam Research, KLA, AMD, and Cadence Design Systems among the most favored.

Progress has also been made in collaborations between NVIDIA and emerging chip companies. NVIDIA has reached licensing agreements with AI chip startups, gaining rights to use their technology and hiring their CEOs. These startups focus on inference technology, and although NVIDIA dominates AI model training, it faces increasing competition in the inference market. This cooperation aims to strengthen NVIDIA’s competitiveness.

Another analysis predicts that the US S&P 500 index will reach 7,400 points by the end of 2026, about 7% higher than current levels, but also admits that increased risks next year may prevent the market from replicating the stellar performance of 2024.