The People’s Bank of China is continuing to hold the CNY (and therefore the CNH also) from falling in value further. The Bank set the USD/CNY reference rate on the 7.17 big figure again today. The modelled estimate for the mid-rate was above 7.31 but yet again the PBoC set it much, much lower.

In addition to this Chinese state banks were in the spot market selling USD/CNY. This is an intervention effort at the behest of the PBoC. It had two impacts:

1. it drove USD/yuan lower for a time

2. it gave USD/yuan bulls an opportunity to scoop some up at a better rate

As I post USD/CNY is back to little changed for the session.

China published August Industrial Profits today. The headline figure for this is the YTD y/y, which came in at a slower drop around -11.7% compared to around -15.5% in July (see bullets above for more on this). However, the change for August alone (not YTD, just the change during August from July) was a much more encouraging +17.7% y/y.

From Australia today we had monthly CPI for August. It came in at 5.2%, well above the 4.9% y/y in July. The trimmed mean measure remained stuck at 5.6% y/y. A bright point was another measure of underlying inflation, ie. the August CPI excluding Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation came in at 5.5% y/y, down from 5.8% in July.

The Australian dollar had popped a little going into the Australian CPI and China IP figures (both were release simultaneously) but soon dripped back towards little net changed on the day. NZD/USD traded a similar pattern but its net lost some ground on the session. The range is small though.

Small ranges across most other major FX prevailed also with only minor, if any, net change.

Asian equity markets:

  • Japan’s Nikkei 225 -0.5%

  • China’s Shanghai Composite +0.3%

  • Hong Kong’s Hang Seng +0.6%

  • South Korea’s KOSPI -0.3%

  • Australia’s S&P/ASX 200 -0.2%


usdcnh 27 September 2023