CNH, HKD Prepared for FOMC with PBOC’s Bills, Pending on Escalated Trade War

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FUNDAMENTAL FORECAST FOR CNH: Neutral

Chinese Yuan Talking Points:

  • PBOC launched central bank bills in Hong Kong, which is able to support the offshore Yuan (CNH).
  • China vowed not to devalue the Yuan for exports, amid escalated trade battles and military sanctions.
  • Hong Kong Dollar surged on PBOC’s bills and leading banks’ interest rate hikes ahead of FOMC.

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The offshore Chinese Yuan gained against the U.S. Dollar this week after three consecutive losses. Yet, it lost to most of the rest major currencies, except the GBP and the JPY. Looking forward, a primary risk for the USD/CNH will be from the September FOMC meeting; China’s Central Bank (PBOC) has introduced a measure that could help to buffer the effect. In addition, the US-China trade war will continues to be in the spotlight and the conflicts between the two countries seem to have expanded to a broader scope.

PBOC LAUNCHES OFFSHORE YUAN BILLS TO PREPARE FOR POTENTIAL SELLING

PBOC announced

Article source: https://www.dailyfx.com/forex/fundamental/article/special_report/2018/09/21/CNH-HKD-Prepared-for-FOMC-with-PBOCs-Bills-Pending-on-Escalated-Trade-War-.html