April 20, 2022 01:51 GMT
Offshore yuan has taken a hit after the PBOC set the yuan reference rate at a weaker than expected level, while leaving its Loan Prime Rates unchanged.
- The People's Bank set the mid-point of permitted USD/CNY trading range at CNY6.3996, 101 pips above the average sell-side estimate.
- However, Chinese policymakers kept 1-Year and 5-Year Loan Prime Rates unchanged at 3.70% and 4.60% respectively, even as Bloomberg consensus looked for 5bp cuts to both rates.
- Note that the renewed outbreak of Covid-19 in China, which pushed several industrial hubs/metropolises into lockdowns, continues to spook investors, as the authorities struggle to contain the spread of infections.
- USD/CNY crossed above its 200-DMA after the fixing for the first time since late August. USD/CNH staged a similar move yesterday, its first foray above the 200-DMA since October.
- When this is being typed, USD/CNH changes hands +101 pips at CNH6.4293, after printing a session high of CNH6.4390. Bulls look for a further rally towards the CNH6.4500 mark, followed by Oct 12 high of CNH6.4644. Bears would be pleased by a pullback under yesterday's low of CNH6.3777.