ICYMI – yuan rocketed higher with the PBOC slamming the fix, and promoting capital inflow

<p>Eyes were on the People's Bank of China Loan Prime Rate setting today:</p><ul><li><a href="https://www.forexlive.com/centralbank/pboc-loan-prime-rates-lpr-remain-unchanged-at-todays-rate-setting-as-expected-20230720/" target="_blank" rel="follow" data-article-link="true">PBOC Loan Prime Rates (LPR) remain unchanged at today's rate setting, as expected</a></li></ul><p>But the PBOC surprised with two moves elsewhere. </p><p>The reference rate was hit with a huge hammer, the Bank set the rate 700+ points lower than the reported expected:</p><ul><li><a href="https://www.forexlive.com/centralbank/pboc-sets-usd-cny-reference-rate-for-today-at-7-1466-vs-estimate-at-72233-20230720/" target="_blank" rel="follow" data-article-link="true">PBOC sets USD/ CNY reference rate for today at 7. 1466 (vs. estimate at 7.2233)</a></li></ul><p>Secondly, the bank eased its macro-prudential adjustment parameter, raising it to 1.5 from 1.25. This eases companies and financial institutions' cross-border financing, enabling more foreign capital inflows.</p><ul><li><a href="https://www.forexlive.com/news/pboc-eases-cross-border-funding-20230720/" target="_blank" rel="follow" data-article-link="true">PBOC eases cross-border funding</a></li></ul><p>CNH has rocketed higher on the twin moves:</p><p>In turn this has fed through to a higher AUD (AUD likes a stronger yuan as at the amrgin it gives China extra $ to buy Australia's goods and services). AUD also supported by another solid jobs report:</p><ul><li><a href="https://www.forexlive.com/news/australia-june-jobs-326k-vs-15k-expected-unemployment-rate-35-vs-36-exp-20230720/" target="_blank" rel="follow" data-article-link="true">Australia (June ) Jobs +32.6K (vs. +15K expected) &amp; Unemployment rate 3.5% (vs. 3.6% exp)</a></li></ul>

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