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ASIA

Coming up in the Asia-Pac session on Tuesday:

USDCAD TECHS

Corrective Bounce

AUDUSD TECHS

Bearish Threat Following Friday’s Sell-Off

EURJPY TECHS

Finds Support Below The 50-Day EMA

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POLICY: China will continue to closely monitor changes in the global pandemic situation, study the impact on the country’s foreign trade and supply chain in a timely manner, said Shu Jueting, spokeswoman of the Ministry of Commerce at a briefing on Thursday.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rates unchanged at 2.2%. The operation has led to a net drain of CNY90 billion after offsetting the maturity of CNY100 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.0670% from 2.0914% on Wednesday, Wind Information showed. The overnight repo average fell to 1.9615% from the previous 1.9999%.

YUAN: The currency weakened to 6.3730 against the dollar from 6.3705 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 6.3719, compared with 6.3693 set on Wednesday.

BONDS: The yield on 10-year China Government Bond was last at 2.9100%, up from Wednesday's close of 2.8900%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.09% to 3,573.84, while the CSI300 index increased 0.25% to 4,856.16. Hang Seng Index gained 0.55% to 23,788.93.

FROM THE PRESS: The Chinese yuan may remain strong by Dec. 31 but depreciate next year as foreign exchange settlements decrease and if the PBOC steps in to prevent one-way bets, the Shanghai Securities Journal reported citing analysts. The yuan may be pressured by the expected U.S. rate hikes, reduced capital inflow, slower growth of trade surplus and external uncertainties next year, the newspaper said citing Hang Seng China Chief Economist Wang Dan. The amount of dollar-to-yuan settlements by Chinese companies has started to decrease in October, weakening support for yuan, the newspaper said citing analysts from Industrial Securities.

China may again set next year’s quota of local government special bonds above CNY3 trillion, though possibly less than this year’s CNY3.65 trillion so to boost investment in transportation, energy and other municipal and national major projects, Yicai.com reported citing analysts. These investment-boosting bonds will be used to counter downward pressure next year as real estate investment and exports are expected to slow. China may allow some of next year’s special bonds to be issued this year. However, high debt ratios of local governments and decreasing land sales revenue limit further expansions of these bonds, the newspaper said.

Chinese real estate developers are selling more bonds as regulators ease the tightening of real estate financing, Yicai.com reported. The scale of real estate bond issuance reached CNY37.14 billion in November, a sharp increase of 186% from October, the newspaper said citing data by the China Index Research Institute. The average interest rate of bonds fell by 0.28 percentage point to 3.80% from the previous month. However, debt financing from overseas markets continues to slow with the issuance scale in November set an annual low of CNY1.01 billion. Issuers will have to raise interest rates as investors’ interests declined after some defaults in October, the newspaper said.

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