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USD/CNH Drifting Higher, LPRs Expected To Remain Unchanged Today

CNH

(MNI Australia) USD/CNH pushed towards 6.9900 post the Asia close but couldn't get beyond this level. We last sat around 6.9860, so still in the upper half of recent ranges.

  • The focus today will rest on the 1yr (currently 3.65%) and 5yr (currently 4.30%) LPRs. No change is expected in either rate from a consensus standpoint, although a few forecasters see the risks of a 10bps cut in the 5yr rate.
  • A surprise 10bps cut in the 5yr rate would likely weigh on the CNH from a policy divergence point.
  • Elsewhere, the China re-opening trade has momentum further. To recap, onshore equities lost between 1.5% to 2.0% yesterday. In US trading the Golden Dragon index slipped by 0.62%.
  • Higher frequency data, such as metro railway passenger rides, continue to highlight mobility levels well below normal trends, which should dent economic activity, particularly in relation to consumer spending.
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