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USD/CNH Hits Fresh Highs Post LPR cuts

CNH

USD/CNH climbed above 6.8500, through Friday night highs, post the LPR cut announcement. The pair got to 6.8515/20, which is highs back to September 2020. We have settled back just below 6.8450 for now.

  • The 5yr LPR was cut by slightly more than expected, -15bps to 4.30%, although as we flagged earlier, quite a number of economists expected such a move. The 1yr LPR was only cut by 5bps to 3.65%, versus 3.60% expected.
  • Still, these moves should underscore the policy divergence with the US in the near term.
  • Around the same time as the LPR announcements, the CNY fixing came in above market estimates (-15pips in USD/CNY terms), but this only provided brief respite for USD/CNH. The dip below 6.8400 was well supported.
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