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The PBOC fixed USD/CNY at 6.4300, 13 pips above sell-side estimates. USD/CNH is still lower, down around 18 pips at 6.4321, but off session lows following the fix. Yuan traders seem unconcerned with the prospect of Fed tapering, market expectations centre around the Jackson Hole meeting in August for the point when the Fed's bias will switch, a stance that has gathered proponents since the FOMC minutes this week. Despite this, USD/CNH 3-month ATM volatility is just above the lowest levels of 2021 and within touching distance of 2020 lows, last at 4.460. USD/CNH has been in a range from 6.60 to 6.40 since November 2020.

  • A senior human resources ministry official said late yesterday that China's employment situation is expected to stay generally stable this year but challenges and uncertainties will persist since the economy's recovery isn't yet on a solid footing. The official noted the need to increase efforts to stabilize employment and for targeted policies under the jobs first banner.
  • In the latest diplomatic sparring China has said the US should stop provocations after a US warship entered Chinese waters. China has said its military will take all necessary measures to respond to threats and provocations.
  • Elsewhere the People's Bank of China will maintain the continuity and stability of its monetary policy to support the uneven recovery and manage external risks, said the Economic Daily in a commentary in an attempt to ease concerns of monetary tightening. M2 expanded 8.1% y/y in April, down from 9.4% y/y in March, PBOC data showed. The deceleration of April M2 was mainly due to the high comparison base same period last year when the central bank offered easier credit to Covid-hit producers and retailers, the newspaper said. If averaged with last April's figures, M2 and total social financing grew 9.6% and 11.9% respectively, which basically matched the nominal economic growth and maintained a reasonable level, the newspaper said.

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