Chinese Yuan Strengthens, Breaking Psychological Barrier; Central Bank Stance Becomes Key
The offshore yuan strengthened significantly against the US dollar on Thursday (December 25), with USD/CNH falling to 6.9965, marking the first break below the “7” psychological level since September 2024, reaching an intraday high of 6.9960. The onshore yuan (USD/CNY) also fell to 7.0051, creating a new low since May 2023.
Year-end settlement and sales of foreign exchange demand coupled with weak US dollar rebound momentum have become the primary drivers of yuan appreciation. A Chinese bank trader noted that current market settlement and sales demand is strong, external US dollars are weak, and consensus expectations for yuan appreciation have formed. However, whether the yuan can continue approaching the 7 level in the short term still depends on the attitude of state-owned major banks.
Goldman Sachs’ latest research reveals a pattern in the central bank’s alternating use of “resilience” and “flexibility” language—this pattern suggests the PBoC may favor yuan appreciation while hoping to avoid excessive pace. Goldman Sachs economist Xinquan Chen points out that the shift in central bank rhetoric from emphasizing “strengthening exchange rate resilience” in September to “maintaining exchange rate flexibility” in November reflects the PBoC’s gradually adjusting tolerance for yuan appreciation. As the yuan has accelerated appreciation recently, the central bank reemphasized exchange rate resilience, indicating an intention to moderate the pace of appreciation. Goldman Sachs maintains its forecast that USD/CNY will reach 6.95, 6.90, and 6.85 in three months, six months, and twelve months respectively.
Precious Metals Rally, Gold Breaks Through $4,500
Friday (December 26) saw a “double harvest” in the precious metals market, with gold briefly breaking through the $4,500 level to $4,504, while silver rose to $73.67, both reaching historic highs. This rally remained resilient despite major global markets being closed for Christmas holidays with thin trading, reflecting sustained strong market demand for precious metals as safe-haven assets and value preservation tools.
Fed Rate-Cut Expectations Heat Up, US Treasury Yields Under Pressure
Bank of America’s latest outlook indicates the market’s expectations regarding next year’s Federal Reserve policy are gradually clarifying. The bank expects the Fed will conduct rate cuts in June and July 2026, while predicting 10-year US Treasury yields will decline to the 4% to 4.25% range by year-end, not ruling out further downside. This means global borrowing conditions will be slightly easier next year than in 2024-2025, but unlikely to return to the ultra-low rate era that once drove housing and stock market surges.
Bank of Japan Continues Rate Hikes, Yen Appreciation Supported
Bank of Japan Governor Kazuo Ueda stated that Japan’s underlying inflation is gradually accelerating and steadily approaching the central bank’s 2% target, with the central bank prepared to continue raising rates. Ueda noted that unless the economy suffers major negative shocks, the labor market will remain tight, creating upward wage pressures, and enterprises are passing increased costs along in the food and other sectors, forming a mechanism of synchronized wage and inflation increases in Japan. With rate-hike expectations clarified, the yen is expected to gain support—according to market data, 10,000 yen currently exchanges for approximately 447 yuan, appreciating over 3% from the start of the year.
Japan’s New Fiscal Year Budget Hits Record, Government Debt Dependency Falls Below 30% for First Time
Japanese Prime Minister Sanae Takaichi announced that the new fiscal year budget starting April 2026 totals approximately 122.3 trillion yen, with quarter-on-quarter growth of about 6.3%, setting a record for initial budgets. However, the government remains intent on maintaining fiscal discipline—new government bond issuance will be controlled at 29.6 trillion yen, the second consecutive year below 30 trillion yen; debt dependency has declined from this fiscal year’s 24.9% to 24.2%, marking the first time in 27 years falling below 30%. Influenced by this news, Japan’s 40-year government bond yields fell 7 basis points to 3.62%, the lowest since November 17.
Chip Industry Bullish on 2026, Semiconductor Sales Expected to Break Through $1 Trillion
Bank of America semiconductor analyst Vivek Arya stated that AI development remains mid-course through a decade-long structural transformation, with overall industry trends still upward, led by industry leaders with clear competitive advantages. He predicts global semiconductor sales will grow 30% in 2026, potentially breaking through the $1 trillion milestone for the first time. He emphasizes companies with high-margin structures and solid market positions will become core investment targets, specifically naming Nvidia, Broadcom, Lam Research, KLA, Analog Devices, and Cadence Design Systems as his six most confident investment picks.
However, CFRA Chief Investment Strategist Sam Stovall poured cold water on this optimism, believing US stocks would need “all engines running” to achieve double-digit gains again. He estimates the S&P 500 index target for end-2026 at 7,400 points, representing only about 7% gains from current levels. While the market may still advance next year, increased headwinds make it unlikely to replicate 2024’s banner year.
Nvidia Authorized to Use Groq Technology, Strengthens Inference Chip Position
Chip giant (Nvidia) and AI chip startup Groq reached a licensing agreement. Under the agreement, Nvidia can use Groq’s chip technology and hire its CEO Simon Edwards; Groq will continue operating as an independent company with its cloud business continuing, while founder Jonathan Ross, President Sunny Madra, and other engineering team members will join Nvidia.
Groq completed $750 million in financing in September at a $6.9 billion valuation, more than doubling from $2.8 billion in August 2023. The company focuses on “inference”—meaning trained AI models responding to user requests. While Nvidia dominates the AI training market, it faces challenges in the more competitive inference segment, and this collaboration helps shore up weaknesses.
Major global markets closed for Christmas holidays, with US markets closed all day December 25 and resuming December 26; Hong Kong markets closed all day December 25-26; European exchanges in London, Frankfurt, Paris and others continue to suspend December 26 for Boxing Day; Asia-Pacific markets in Australia, Singapore and elsewhere will also close per local custom, with significantly reduced global trading activity.
12月26日経済ニュース：人民元対ドルが7を割り、数ヶ月ぶりの安値を記録、金と銀が史上最高値を更新
Chinese Yuan Strengthens, Breaking Psychological Barrier; Central Bank Stance Becomes Key
The offshore yuan strengthened significantly against the US dollar on Thursday (December 25), with USD/CNH falling to 6.9965, marking the first break below the “7” psychological level since September 2024, reaching an intraday high of 6.9960. The onshore yuan (USD/CNY) also fell to 7.0051, creating a new low since May 2023.
Year-end settlement and sales of foreign exchange demand coupled with weak US dollar rebound momentum have become the primary drivers of yuan appreciation. A Chinese bank trader noted that current market settlement and sales demand is strong, external US dollars are weak, and consensus expectations for yuan appreciation have formed. However, whether the yuan can continue approaching the 7 level in the short term still depends on the attitude of state-owned major banks.
Goldman Sachs’ latest research reveals a pattern in the central bank’s alternating use of “resilience” and “flexibility” language—this pattern suggests the PBoC may favor yuan appreciation while hoping to avoid excessive pace. Goldman Sachs economist Xinquan Chen points out that the shift in central bank rhetoric from emphasizing “strengthening exchange rate resilience” in September to “maintaining exchange rate flexibility” in November reflects the PBoC’s gradually adjusting tolerance for yuan appreciation. As the yuan has accelerated appreciation recently, the central bank reemphasized exchange rate resilience, indicating an intention to moderate the pace of appreciation. Goldman Sachs maintains its forecast that USD/CNY will reach 6.95, 6.90, and 6.85 in three months, six months, and twelve months respectively.
Precious Metals Rally, Gold Breaks Through $4,500
Friday (December 26) saw a “double harvest” in the precious metals market, with gold briefly breaking through the $4,500 level to $4,504, while silver rose to $73.67, both reaching historic highs. This rally remained resilient despite major global markets being closed for Christmas holidays with thin trading, reflecting sustained strong market demand for precious metals as safe-haven assets and value preservation tools.
Fed Rate-Cut Expectations Heat Up, US Treasury Yields Under Pressure
Bank of America’s latest outlook indicates the market’s expectations regarding next year’s Federal Reserve policy are gradually clarifying. The bank expects the Fed will conduct rate cuts in June and July 2026, while predicting 10-year US Treasury yields will decline to the 4% to 4.25% range by year-end, not ruling out further downside. This means global borrowing conditions will be slightly easier next year than in 2024-2025, but unlikely to return to the ultra-low rate era that once drove housing and stock market surges.
Bank of Japan Continues Rate Hikes, Yen Appreciation Supported
Bank of Japan Governor Kazuo Ueda stated that Japan’s underlying inflation is gradually accelerating and steadily approaching the central bank’s 2% target, with the central bank prepared to continue raising rates. Ueda noted that unless the economy suffers major negative shocks, the labor market will remain tight, creating upward wage pressures, and enterprises are passing increased costs along in the food and other sectors, forming a mechanism of synchronized wage and inflation increases in Japan. With rate-hike expectations clarified, the yen is expected to gain support—according to market data, 10,000 yen currently exchanges for approximately 447 yuan, appreciating over 3% from the start of the year.
Japan’s New Fiscal Year Budget Hits Record, Government Debt Dependency Falls Below 30% for First Time
Japanese Prime Minister Sanae Takaichi announced that the new fiscal year budget starting April 2026 totals approximately 122.3 trillion yen, with quarter-on-quarter growth of about 6.3%, setting a record for initial budgets. However, the government remains intent on maintaining fiscal discipline—new government bond issuance will be controlled at 29.6 trillion yen, the second consecutive year below 30 trillion yen; debt dependency has declined from this fiscal year’s 24.9% to 24.2%, marking the first time in 27 years falling below 30%. Influenced by this news, Japan’s 40-year government bond yields fell 7 basis points to 3.62%, the lowest since November 17.
Chip Industry Bullish on 2026, Semiconductor Sales Expected to Break Through $1 Trillion
Bank of America semiconductor analyst Vivek Arya stated that AI development remains mid-course through a decade-long structural transformation, with overall industry trends still upward, led by industry leaders with clear competitive advantages. He predicts global semiconductor sales will grow 30% in 2026, potentially breaking through the $1 trillion milestone for the first time. He emphasizes companies with high-margin structures and solid market positions will become core investment targets, specifically naming Nvidia, Broadcom, Lam Research, KLA, Analog Devices, and Cadence Design Systems as his six most confident investment picks.
However, CFRA Chief Investment Strategist Sam Stovall poured cold water on this optimism, believing US stocks would need “all engines running” to achieve double-digit gains again. He estimates the S&P 500 index target for end-2026 at 7,400 points, representing only about 7% gains from current levels. While the market may still advance next year, increased headwinds make it unlikely to replicate 2024’s banner year.
Nvidia Authorized to Use Groq Technology, Strengthens Inference Chip Position
Chip giant (Nvidia) and AI chip startup Groq reached a licensing agreement. Under the agreement, Nvidia can use Groq’s chip technology and hire its CEO Simon Edwards; Groq will continue operating as an independent company with its cloud business continuing, while founder Jonathan Ross, President Sunny Madra, and other engineering team members will join Nvidia.
Groq completed $750 million in financing in September at a $6.9 billion valuation, more than doubling from $2.8 billion in August 2023. The company focuses on “inference”—meaning trained AI models responding to user requests. While Nvidia dominates the AI training market, it faces challenges in the more competitive inference segment, and this collaboration helps shore up weaknesses.
Major global markets closed for Christmas holidays, with US markets closed all day December 25 and resuming December 26; Hong Kong markets closed all day December 25-26; European exchanges in London, Frankfurt, Paris and others continue to suspend December 26 for Boxing Day; Asia-Pacific markets in Australia, Singapore and elsewhere will also close per local custom, with significantly reduced global trading activity.