Yuan Weakens As Risk Assets Hit

The PBOC fixed USD/CNY at 6.5036, around 10 pips below sell side estimates, the sum of the differences in March is now just 1 pip. Offshore yuan is weaker, a piece in China's financial press opined that the PBOC unlikely to tighten policy quickly, while risk assets have run into further headwinds after German Chancellor Merkel announced stricter lockdown measures to be in place over Easter.

• China's PM Li said yesterday that China's economic growth could exceed target this year, he said "We need to seek a balance between growth, income, and employment, and we cannot pursue economic growth based on high energy consumption and heavy pollution."
• Elsewhere ex-PBOC adviser Li says China faces the threat of foreign outflows later in the year as rising borrowing costs in the US drives investors out of emerging markets.
• USD/CNH last trades at 6.5091, up 19 pips on the day. Bulls look for a break above 6.5222 to open up a path towards the 2021 high at 6.5600. Bears look for a break of 6.50, which brings last weeks low of 6.4850 into focus.