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Firmer PBOC Fix Fails To Prop Up Offshore Yuan

CNH

Spot USD/CNH has generally moved in sync with the BBDXY index, showing a muted reaction to the 30th consecutive stronger-than-expected PBOC fixing.

  • The mid-point of permitted USD/CNY trading band was set at CNY7.1103, 647 pips below the sell-side estimate. The yuan appreciation bias is largest since Sep 29, when the People's Bank fixed the yuan reference rate 729 pips below the expected level.
  • On Tuesday, the PBOC's monetary policy dept reiterated that it will prevent big fluctuations in FX rates, but officials think that the currency market is able to achieve balance by itself.
  • Spot USD/CNH last trades +117 pips at CNH7.1850. The high print of Sep 28 provides the initial layer of resistance at CNH7.2674, while bears keep an eye on Oct 5 low/50-DMA at CNH7.0127/6.9578.
  • Later this week, China's inflation and trade data for the month of September will hit on Friday.

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