Yuan Resists PBOC Attempts To Arrest Its Depreciation

The PBOC continues to push back against yuan depreciation via its daily fixing, but to no avail. Spot USD/CNH shed >100 pips as the People's Bank set its yuan reference rate 37 pips below the average sell-side estimate, but the pair was well supported on the dip and staged a firm rebound. It last operates at CNH6.6655, up 59 pips on the day.

• From a technical perspective, a break above yesterday's high of CNH6.6748 would bring Nov 4, 2020 high of CNH6.7745 into view. On the flip side, bears look for a pullback under Apr 1 peak located at CNH6.5876, a recent breakout level.
• China will remove tariffs on coal imports from May to help guarantee energy supplies. The nation's coal imports shrank by almost a quarter through the end of March amid rising global commodity prices.
• Worth noting that challenges surrounding the outbreak of Covid-19 and its economic impact bring the upcoming Politburo meeting into sharper focus. The top echelon of China's policymakers are expected to gather in the coming days and any communique from that meeting will provide interest.
• China will observe a three-day Labour Day break starting Monday, with official & private PMI readings due for release towards the back end of next week.