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CHINA YUAN
CHINA YUAN: USD/CNH has lost altitude as the greenback was offered amid broader
risk-on flows. The rate last trades -75 pips at CNH7.1264. The first PBoC fix of
the week was roughly in line with estimates. On the data front, China reported
April new home prices, which rose 0.42% M/M.
- Chinese Commerce Minister Zhong Shan highlighted threats from the coronavirus
pandemic to China's foreign trade. He added that China will continue widening
market access, but didn't reveal much detail.
- Worth re-flagging PBoC rhetoric from over the weekend, covered in our POLICY
pieces. Gov Yi pledged to step up monetary policies "with more focus on
flexibility", while MPC's Ma pushed back against monetization of debt.
- Elsewhere, reports re: Sino-U.S. tensions have been doing the rounds, but they
pointed to little beyond rhetoric and potential actions.
- Bears need a dip through trendline support at CNH7.1065 to bring May 8 low of
CNH7.0812 into play. Meanwhile, a jump above Friday's peak at CNH7.1354 would
expose CNH7.1561, the high of May 4.
- Focus turns to Wednesday's 1-Year & 5-Year LPR fixings.