PBOC Show No Signs Of Discomfort With Rally In Offshore Yuan

Spot USD/CNH has lost altitude at the start to the new week, approaching the Dec 8 cycle low of CNH6.3305. The PBOC held off on reigning in redback appreciation with their daily fixing, which fell virtually in line with expectations.

• The pair last changes hands -80 pips at CNH6.3333 and a break below that CNH6.3305 level would bring May 11, 2018 low of CNH6.3198 into view. Bulls need to retake the CNH6.3625/26 area, which capped gains on Jan 18/19, before targeting Jan 6/Nov 26 highs of CNH6.3976/99.
• The PBOC slashed their 14-Day Revere Repo rate by 10bp to 2.25%. The move came on the heels of last week's cuts to China's Loan Prime Rates as well as the interest rates applied to 7-Day Reverse Repo and 1-Year MLF operations.
• A former PBOC official told Bloomberg that rate cuts will not be sufficient to stabilise the economy, adding that he would "emphasise the importance of fiscal policy."
• China's industrial profits will hit the wires on Thursday, with official PMIs & Caixin M'fing PMI due Sunday. Following that, China is set to observe a week-long Lunar New Year holiday.