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PBOC Strengthens Yuan Again

CNH

The PBOC fixed USD/CNY at 6.4604, another stronger fix after 648 pips yesterday. The bank drained CNY 130bn of liquidity from the system, equating to a total drain of CNY 400bn so far this week.

  • Tensions continue to simmer between the US and China. The NYSE is reconsidering its decision to halt the delisting of 3 Chinese telecommunications firms after US Tsy Sec Mnuchin opposed the decision to grant the companies exculpation.
  • There were reports in China Sec. Journal that the foundation still exists for the yuan to continue to appreciate in 2021, but the pace may slow due to global economic recovery and normalization of major economies' mon pol.
  • Markets will look ahead to Caixin China PMI Services and Composite data at 0145GMT/0945CST. The manufacturing measure fell in December based on weak demand globally. The Caixin PMI is weighted toward small, private firms.

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