PBOC

Only intervention from the Bank of Japan (BOJ) or a dramatic increase in Fed rate cut bets look to be standing between USD/JPY and a test of the multi-decade highs struck in late April, unless the People’s Bank of China (PBOC) moves aggressively to curb weakness.

The People’s Bank of China (PBOC) continues to loosen its grip on the Chinese yuan, sending USD/CNH highs not seen since late 2023 on Thursday. Given the influence the yuan has on emerging market and other Asian currencies, the technical break may have global ramifications if it sticks.

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China’s “National Team”, the nickname given to state-backed entities tasked with rescuing markets, are doubling their efforts, upping purchases of exchange-traded funds (ETFs) while restricting certain undesirable activities detrimental to stock prices. So far, indices such as the A50 are rallying.

China’s ‘National Team’ – a collection of state or quasi state-backed entities tasked by the government to smooth out financial market ructions when the prevailing price action is deemed desirable – looks like it may have been mobilised with China’s A50 ripping higher late Thursday and going on with the move today.

Chinese inflationary pressures remain weak, whether it be upstream or for consumers. But with expectations for further stimulus from the Chinese policymakers baked in the cake, does it have implications for China’s equity market or currency?

China’s August “data dump” has come in ahead of expectations, solidifying the view activity in the world’s second-largest economy is beginning to stabilise.

USD/CNH has broken out of the range it’s been in since July, signaling a potential period of consolidation, or even a reversal, from the prevailing bullish trend.

The PBOC lifted China’s equity markets and commodity FX pairs with another round of easing, aimed at supporting their flailing property market.

USD/CNH enjoyed its best day since the pandemic yesterday following China’s weak data, as the PBOC seemingly want to allow their currency to slide to help support the economy.

The most impactful piece of news from China was the increase in the Reserve Requirement Ratio (RRR) by the PBOC from 7% to 9%

The independence of China’s central bank is being questions on reports that China’s top anticorruption agency have been the PBOC’s offices after the past few weeks.

It appears that the PBOC couldn’t keep the Yuan down any longer and may have “let it go” to take out stops below the market

The People’s Bank of China is somewhat of an enigma compared to other central banks. Find out everything you need to know about the PBOC and how its meetings influence financial markets.