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Yuan Holds Tight Range, PBOC Expected To Boost Credit Support Soon

CNH

Spot USD/CNH has wavered within a tight range and last changes hands -15 pips at CNH6.4830, with participants on the lookout for fresh catalysts. A fall through Aug 24 low of CNH6.4654 would bring the 100-DMA at CNH4.4605 into view. Meanwhile, bulls set their sights on CNH6.5102, which represents the high print of Aug 20.

  • China's industrial profits grew 16.4% Y/Y in July after a 20.0% increase recorded in June. The continued slowdown has been attributed to adverse weather conditions, new Covid-19 outbreaks and higher raw material prices.
  • The PBOC fix fell in line with sell-side expectations today, as China's central bank set their central USD/CNY midpoint at CNY6.4863.
  • China Securities Journal cited analysts noting that the PBOC are expected to boost credit supply soon and are likely to trim RRR rates. As a reminder, PBOC Gov Yi vowed earlier this week to increase credit support.
  • Elsewhere, the central bank pledged Thursday to use monetary policy tools to aid rural development and said they will use relending and rediscounting tools to meet their goals.
  • Official and Caixin PMI reports headline the local data docket next week.

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