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USDCNH Reverses After Registering All-Time-Highs

EMERGING MARKETS
  • Worth recapping the overnight news/moves for CNH. The PBOC set the daily yuan reference rate at CNY7.1188 in the strongest show of redback appreciation bias on record. The fixing fell 950 pips below the sell-side estimate, widening from yesterday's -558 error term by a notable margin.
  • Still, the actual reference rate deviated to the upside from the recent string of fixing outcomes clustered around the CNY7.1100 mark. Although the deviation wasn't too large, some may have interpreted it as a sign of the PBOC's limited discomfort with depreciation pressures.
  • The People's Bank also kept its 1-Year and 5-Year Loan Prime Rates unchanged at 3.65% and 4.30% respectively, in line with expectations, amid concerns that renewed monetary easing could exacerbate redback weakness.
  • Additionally, according to Bloomberg news report, China is said to be considering reducing the amount of time people have to spend in quarantine upon entering the country, giving risk sentiment and CNH an additional boost overnight.

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