Yuan Consolidates Gains Registered On Loans Data & PBoC Remarks

Spot USD/CNH accelerated losses on Thursday as PBOC's monetary policy department head Sun told reporters that the "moderate" appreciation of the yuan reflects China's growth momentum, hinting that that policymakers are comfortable with a stronger currency. Sun added that the PBoC is ready to stabilise FX markets if needed, but remains committed to maintaining exchange rate flexibility. The rate approached the round figure of CNH6.7 before trimming gains.

• During the same press briefing, PBoC's statistics department head Ruan said that the economy's overall leverage should be allowed to rise and anticipated that Q3 GDP data will be better than Q2's, which will help keep the debt/GDP ratio in check.
• Sales inspired by comments from PBoC's Sun came on top of money supply and loans data released earlier. M2 money supply, new loans and aggregate financing topped estimates, generating a round of redback purchases.
• Per Global Times, the recent coronavirus outbreak in the city of Qingdao was linked to a hospital. The city aims to test all 11mn residents of the city by Friday.
• USD/CNH has stuck to a narrow range so far, fading its initial uptick. The pair trades flat at CNH6.7107 at typing, hovering just above yesterday's low of CNH6.7039. A slid through that level and Oct 9 cycle low of CNH6.6787 would expose Mar 21, 2019 low of CNH6.6704. On the flip side, a clearance of Oct 13 high of CNH6.7653 would allow bulls to set their sights on the 50-DMA/Sep 24 high at CNH6.8300/6.8462.
• Chinese inflation data headlines locally today, with PBoC fixing of the central USD/CNY mid-point also eyed.