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USD/CNY Swings To Loss, PBoC Fixing Model Tweak In Focus

CHINA YUAN

Spot USD/CNH has wavered within a 165 pip range so far, fading its initial uptick in sync with a modest pullback in the DXY. The rate last trades -51 pips at CNH6.7102.

  • The PBoC set its central USD/CNY mid-point at CNY6.7195, a handful of pips above the BBG est. of CNY6.7183.
  • After Beijing hours on Tuesday CFETS confirmed earlier reports that some banks contributing to the PBoC's yuan mid-point fixing have stopped using the counter-cyclical factor in calculating the reference rate. Please see our primer on the matter to learn more details.
  • China's tensions with Taiwan continue to simmer, this time over U.S. arms sales to the self-ruled island. Beijing reiterated that the transaction undermines peace and stability in the region. Yesterday evening, China's MoF said that the army is capable of defeating Taiwanese separatism.
  • Bulls look to take out Oct 15 high of CNH6.7324 before targeting Oct 13 high of CNH6.7653, followed by the 50-DMA at CNH6.7838. Bears need a dip through Oct 21 low of CNH6.6278 to gain some fresh momentum.
  • Looking ahead, China will release official PMI figures this Saturday.

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