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Greenback Extends Advance, CNH Dips Following PBOC Action

LATAM
  • An extension of Friday’s risk off tone across equity markets continues to lend support to the dollar index. As such, EURUSD slipped briefly back below parity and the USD Index continues to narrow the gap with the July highs.
  • China’s reference lending rates were lowered on Monday, according to a statement on the People's Bank of China website, with the move coming after the central bank cut key policy rates last week.
  • The one-year Loan Prime Rate was reduced by 5bp to 3.65%, while the five-year Loan Prime Rate fixed 15bp lower, at 4.30%. Despite the steps being slightly out of line with the wider consensus, USDCNH has risen 0.43%, slightly outpacing the broader greenback advance.
  • Monday’s data docket remains light, with Argentina trade balance data the highlight. Market attention likely to turn to flash Eurozone PMIs on Tuesday. Looking ahead to later this week, the Jackson Hole Symposium will take focus for global markets.

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