Dollar/Yuan Higher After Weak Fix, Negative Risk Sentiment And Liquidity Injection

PBOC fixed USD/CNY at 6.5507, around 192 pips weaker than Friday's fix of 6.5315, but slightly stronger than sell side estimates of 6.5523. The 192 pip swing in the fixing is the biggest change since November 20.

• The PBOC injected a net CNY 90bln of liquidity after a net drain of approximately CNY 70bln last week. The injection saw money market rates fall after creeping higher last week. The PBOC injected using the 14-day OMO facility ahead of the festive period, the first time the facility has been used since September.
• China kept LPR rates on hold at 3.85% (1-year) and 4.65% (5-year). Recent positive data has led to speculation that the PBOC may begin normalising policy, though weak inflation figures could put those plans on hold.
• Risk assets have taken a knock as markets digest news from the UK of the COVID-19 situation in the UK/Brexit dynamics, while the US dollar is higher on the session despite progress in stimulus talks and a touted vote on a spending bill on Monday evening.