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US-China Relations In Focus, No Change Expected in 5yr & 1yr LPRs


(MNI Australia) USD/CNH got near 6.9000 in Friday trade, but as broader USD sentiment softened we fell back to the 6.8700/6.8750 region. We currently track a little higher at 6.8760/70 level. The pair is wedged between the 100-day EMA on the topside (near 6.9040) and the 50 and 200-day EMAs on the downside (both close to 6.8600). The CNY NEER ended last week at 126.12 (J.P. Morgan Index), similar levels to end of the previous week.

  • The weekend press was dominated by US-China articles, with tensions not appearing to be lowered by the Blinken and Wang Yi meeting towards the end of last week.
  • The supply of goods to Russia from China is one point of tensions, amid the on-going war in Ukraine, while the other is US visits to Taiwan, with a top Pentagon official arriving in Taiwan.
  • Talks will also reportedly take place in Washington this week between US and top Taiwan officials.
  • Locally today we have the 5yr and 1yr LPR outcomes. Both are expected to be left unchanged (5yr at 4.30%, 1yr at 3.65%), following last week's unchanged 1yr MLF rate. The data calendar is quiet for the rest of the week.

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