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Yuan Rangebound After PBOC Liquidity Injection

CNH

Spot USD/CNH holds a tight range, after an unconvincing foray into negative territory. The rate operates at CNH6.3739, just shy of neutral levels.

  • The PBOC set their yuan reference rate at CNY6.3735 today, 5 pips below BBG sell-side estimate.
  • In addition, the People's Bank provided another fairly generous liquidity injection today, possibly in response to tight cash supply into the end of the year.
  • Looking ahead, China will report its official PMI data for December on the last day of the year.
  • From a technical perspective, the next key bearish target is provided by CNH6.3305, which represents the low print of Dec 8. Bulls look to a jump above the 50-DMA at CNH6.3831 towards Dec 17 high of CNH6.3939.

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