Fix Eyed For PBOC Stance Clues

The PBOC fixed USD/CNY at 6.4746, weakening the yuan by 141 pips. Sell side estimates predicated a fixing some 22 pips stronger for the yuan, but is much more in line than the 95 pip discrepancy yesterday which markets interpreted as a signal the PBOC were uncomfortable with too much strength in the yuan.

• USD/CNH was trending lower, but has bounced off a session low of 6.4583 post-fix.
• Little reaction seen to trade data. Exports rose 7.1% Y/Y in yuan terms in December against estimates for a 10.9% rise. Imports fell 0.2% against expectations of a 0.1% rise, the trade balance rose to a surplus of CNY 516.81bn from CNY 507.1bn. The figures in yuan terms paint a more pessimistic picture than USD figures owing to positive conversion effects.
• Earlier the Trump administration decided against banning American investment in Alibaba, Tencent and Baidu on the grounds that they had ties to the Chinese military. Trump also amended a November executive order that banned transactions in Chinese military linked companies to include possession as well as sale/purchase.
• There were reports after market yesterday that China had taken further steps to slow down capital inflows by increasing the QDII outbound portfolio investment quota by $9bn. The quota is not $125.7bn.