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Yuan Falters After Softer Then Expected PBOC Fix

FOREX

The yuan weakened as the PBoC set its central USD/CNY mid-point at CNY6.3963, 32 pips above sell-side estimate. The fixing represented yet another sign that China's central bank is opposed to further yuan appreciation. USD/CNH reclaimed the bulk of its Friday loss, even as it showed little immediate reaction when China's trade surplus proved narrower than forecast.

  • Yuan weakness in combination with softer e-minis may have applied a modicum of pressure to the Antipodeans, with regional liquidity sapped by a market holiday in New Zealand. AUD failed to draw any meaningful support from a solid local ANZ job ads print & S&P's decision to upgrade Australia's credit rating outlook.
  • Sterling showed some weakness in Asia-Pac hours amid worries over the spread of a highly transmissible variant of coronavirus in the UK as well as continued tensions with the EU over Northern Ireland.
  • German factory orders, Norwegian industrial output & comments from BoE's Broadbent take focus from here.

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