USD/CNH Holding Above 7.1600, 5yr LPR Expected To Be Cut By 15bps

USD/CNH dips sub 7.1600 were supported post the Asia close. We saw a brief move lower on headlines that President Xi would meet with US Secretary of State Blinken, but this proved short lived. The pair spent most of the post Asia close above 7.1600. The pair last tracked around 7.1640, with moves towards the 7.1675 region drawing selling interest. USD/CNY spot finished Monday's session at 7.1635.

• The meeting between Blinken and Xi Jinping didn't herald any major breakthroughs, but that wasn't expected. Issues remain, particularly on the defense side (see this link for more details). Still, the meeting hopefully paves the way for continued dialogue going forward.
• Today the focus is on the 5yr and 1yr LPR outcomes. The market consensus is now for a 15bps cut in the 5yr LPR, taking the rate to 4.15%, while the 1yr is expected to be cut to 3.55% (from 3.65%).
• This comes after last week's rate cuts for the PBoC 7 day repo, SLF and MLF rates. Onshore media continued to talk about stimulus prospects yesterday, although sentiment was left a little dented from the lack of detail after Friday's State Council meeting.