There was a brief bout of buying for non-USD majors in the early hours but this quickly faded as Friday’s USD surge resurfaced. USD/JPY was in its own world of course, it swung in a range for the session and as I post is only a little net changed.

On data. New Zealand retail sales data came in weaker than expected for Q4 2022 as the impact of rising rates was felt in the New Zealand economy. NZD/USD did little in response to the old data.

News flow was light. We did get Brexit (remember that?) related info. It appears that the UK and EU are very close to an agreement on the Northern Ireland Protocol. More news as this as it developed in the points above.

On central banks. The People’s Bank of China slashed the onshore yuan at today’s reference rate setting, by more than 600 points from Friday’s mid-rate. It was the biggest weakening of the onshore yuan at the setting since July last year and it took the reference rate to its weakest (for the CNY) since December 30 last year. This pops up questions about whether Chinese authorities are using a weaker yuan to prop up imploding real estate-related domestic economic weakness and to hold on to export gains. These have diminished as the pandemic-induced boom in goods has faded towards services. A weaker yuan would serve somewhat as an offset for China’s goods exporters.

Asian equity markets:

  • Japan’s Nikkei 225 -0.15%

  • China’s Shanghai Composite -0.1%

  • Hong Kong’s Hang Seng -0.45%

  • South Korea’s KOSPI -1%

  • Australia’s S&P/ASX 200 -1.3%

Offshore yuan:

yuan wrap 27 February 2023