Yuan Edges Higher Despite Weak Bias In PBOC Fix, Covid Worry

Spot USD/CNH has faltered despite a softer than expected PBOC fix and the lingering worry surrounding China's Covid-19 situation. The rate last changes hands at CNH6.3856, 28 pips lower on the day.

• The PBOC set the yuan reference rate at CNY6.3795, 20 pips above the average sell-side estimate. It was the first weaker than expected fixing in four days.
• China's Premier Li asked local authorities to "add a sense of urgency" while implementing policies, signalling growing discomfort with the current outbreak of Covid-19 which has pushed swathes of China's economy into lockdowns. The news that Shanghai was easing its restrictions inspired some optimism on Monday, but it turned out that many of the localities switching to looser curbs were relatively sparsely populated.
• Participants look ahead to the release of China's monthly trade balance tomorrow, with new home prices coming up on Friday.
• Bears need USD/CNH to stage a convincing break of a recent support area at CNH3588-81 before they can target Mar 31 low of CNH6.3452. Bulls look for a rally above Mar 28 high of CNH6.3983, towards the 200-DMA at CNH6.4039.