The focus for the session was on the People’s Bank of China decision on its Loan Prime Rates (LPRs). Last week the PBoC left its Medium-term Lending Facility (MLF) rate unchanged, an indication that LPRs would also be untouched. And that proved to be the case:

3.45% for the one year, this was last cut in August 2023 from 3.55%

4.20% for the five year, this was last cut in June 2023 from 4.30%

for completeness, the MLF rate is currently 2.5%, this was last cut in August 2023 from 2.65%

In response to the announcement USD/CNH dipped to hit 7.1964, the highest for the offshore yuan in nearly 7 days, but it soon retraced to touch around 7.2080.

In US political news Ron DeSantis quit the race for his party’s nomination to run for President. This leaves only Nikki Haley and Trump in the running, with Haley an underdog.

Data and news flow was otherwise absent.

The US dollar lost ground against much of major FX on the session. USD/JPY led the way, down to under 147.80 at one stage. Ranges across major FX were small only.

China mainland and Hong Kong stocks traded heavily again.

china Hong Kong stocks wrap 22 January 2024