Looking Through PBoC Headlines

MNI (London) - USD/CNH has looked through headlines confirming that the PBoC has extended policies to support the country’s real estate market until the end of 2024, as it aims to ensure the delivery of homes. Headwinds for the sector are well known, with the sector’s large weighting in Chinese GDP metrics also well-documented.

• USD/CNH continues to coil in the rough CNH7.24-25 band in play over the last few hours, with participants focused on the incoming slew of domestic data (particularly the credit readings after state-owned media outlets ran comments alluded to the potential for a meaningful uptick in June’s credit metrics back in June) and the July Politburo gathering (no formal date announced), given the attention on the potential for the deployment of a stimulus package in light of domestic economic headwinds.
• Former Chinese Finance Minister, Lou Jiwei, told China Daily the following over the weekend: “Expanding this year's fiscal deficit to support smaller businesses and removing restrictions on homebuying should be feasible policy options”… “However, authorities should refrain from issuing new government debt to substitute for implicit debt.” This could water down easing expectations. We have already noted that the risk seems to be tilted towards under, not over, delivery on the stimulus front.