MNI China Daily Summary: Friday, February 3

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Decline In New Home Prices Accelerate, Weighing On Yuan

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The ideally in-line fixing of USD/CNY reference rate has had no tangible impact on offshore yuan, with USD/CNH trading a touch higher on the day amid broader greenback outperformance. The rate has extended gains after data showed that Chinese home prices accelerated their decline.

  • China's central bank set the USD/CNY mid-point at CNY7.0363, which matched the sell-side estimate. The previous two days saw very marginal deviations from expected levels.
  • The Securities Times reported that Chinese banks will likely cut LPRs with five-year maturities and longer further this year, even as the PBOC kept its medium-term facility unchanged this month. The next LPR fixing is due Monday.
  • China's new home prices fell 0.37% M/M last month after a 0.28% decline registered in September. This means monthly losses have accelerated to the fastest pace since February 2015, adding pressure to China's beleaguered property sector.
  • Spot USD/CNH last deals at CNH7.0628, up 142 pips on the day. A break above the 50-DMA at CNH7.1474 would please bulls, while bears look for losses past Nov 14/Oct 5 lows of CNH7.0196/7.0127.
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The ideally in-line fixing of USD/CNY reference rate has had no tangible impact on offshore yuan, with USD/CNH trading a touch higher on the day amid broader greenback outperformance. The rate has extended gains after data showed that Chinese home prices accelerated their decline.

  • China's central bank set the USD/CNY mid-point at CNY7.0363, which matched the sell-side estimate. The previous two days saw very marginal deviations from expected levels.
  • The Securities Times reported that Chinese banks will likely cut LPRs with five-year maturities and longer further this year, even as the PBOC kept its medium-term facility unchanged this month. The next LPR fixing is due Monday.
  • China's new home prices fell 0.37% M/M last month after a 0.28% decline registered in September. This means monthly losses have accelerated to the fastest pace since February 2015, adding pressure to China's beleaguered property sector.
  • Spot USD/CNH last deals at CNH7.0628, up 142 pips on the day. A break above the 50-DMA at CNH7.1474 would please bulls, while bears look for losses past Nov 14/Oct 5 lows of CNH7.0196/7.0127.