ForexLive Asia-Pacific FX news wrap: PboC struggle to hold the line on yuan

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The
People’s Bank of China once again set the USD/CNY reference rate
more than 1100 points lower than the modelled estimate. The
difference today was that the Bank set the rate above 7.20 as it
conceded, just a little, to market pressure on the yuan. The low
setting for the onshore yuan prompted a sharp selloff for it and the
offshore (CNH) in the market. As I post there have been no sightings
of spot FX intervention to support the yuan.
</p><p>CNY
traded to its lowest since December of 2007.</p><p>USD/JPY
was also a mover on the session. It dropped to lows around 146.60.
You’ll note in the bullets above some verbal intervention from
Japan’s finance minister Suzuki. These came after the drop, they
didn’t trigger it. As it happens USD/JPY recovered its lost ground
after Suzuki had made his statement and is back above 147.20 as I
update. Feel free to speculate on Japan Inc. front running official
remarks …</p><p>Also
from Japan today were data including the revised Q2 GDP numbers.
The 6% preliminary Q2 GDP (quarterly annualized) was revised down to
a still very strong 4.8% y/y. The q/q was revised down from 1.5% to
1.2%. Markdowns came from:</p><ul><li>private
consumption at
-0.6%</li><li>business
spending -1.0%</li></ul><p>The
external sector remained unchanged with net exports at +1.8%. This is
a great result, the buts being:</p><ul><li>headwinds
from China may slow exports ahead</li><li>strong
exports are masking weak
domestic demand</li></ul><p>Also
from Japan were very poor real wage data (see bullets above).
</p><p>EUR/USD
moved higher during the session. Also a little stronger against the
dollar were GBP, AUD (held back by imminent LNG strike action), NZD and CAD. A dribble lower for US yields
seems to be the smoking gun for these small moves.</p><p>ps. coming up over the weekend:</p><ul><li><a href="https://www.forexlive.com/news/heads-up-for-chinese-inflation-data-due-over-the-weekend-august-cpi-and-ppi-20230908/" target="_self">Heads up for Chinese inflation data due over the weekend – August CPI and PPI</a></li></ul><p>Asian
equity markets:</p><ul><li><p>
Japan’s
Nikkei 225 -0.94%</p></li><li><p>
China’s
Shanghai Composite -0.44%</p></li><li><p>
Hong
Kong’s Hang Seng 0% (Hong Kong morning trade was closed because of the Black Rainstorm)</p></li><li><p>
South
Korea’s KOSPI -0.56%</p></li><li><p>
Australia’s
S&amp;P/ASX 200 -0.34%</p></li></ul><p>USD/CNH hourly:</p>

This article was written by Eamonn Sheridan at www.forexlive.com.