On approach to the PBOC onshore yuan reference rate setting, a 3 month outlook for CNY

Barclays on the People's Bank of China and their setting of the CNY:

PBoC tolerance for CNY strength this year and our above-consensus growth outlook support marking down of our USDCNY forecasts.

• We think China will prefer levying tariffs on US imports of low importance rather than weakening the CNY to address punitive US trade policies.

Escalating trade protectionism is a risk but the global backdrop remains generally supportive of EM assets and tariffs imposed to date are likely to encourage a greater tolerance for CNY strength, especially given the US Treasury's flagging of China's trade surplus in its last report.

We expect gradual CNY appreciation versus the USD but a relatively stable trade-weighted CNY as recent domestic political developments indicate policy continuity

Barclays 3 month directional outlook for CNY is 'neutral'