ForexLive Asia-Pacific FX news wrap: Chinese bank rate cuts

• US President Biden has ordered "all available federal firefighting assets" to Canada
• Citi forecasts gold to USD2200 after a dip first
• China financial regulator says economy still recovering, demand will increase
• Australian April Exports -5% m/m (prior 4%) & Imports 2% m/m (prior 2%)
• South Korea's fin min says inflation is still high, will be the policy focus for now
• PBOC sets USD/ CNY reference rate for today at 7.1280 (vs. estimate at 7.1282)
• More Chinese banks cut rates
• Chinese media speculate on a loan prime rate cut after banks reduced deposit rates
• The PBOC is expected to set the USD/CNY reference rate at 7.1282 – Reuters estimate
• Industrial and Commercial Bank of China cuts yuan deposit rates
• Japan Q1 GDP +0.7% q/q (flash was just +0.4%)
• Eyes on the PBOC CNY rate today after a slump in CNH overnight
• UK labour market momentum slowing - starting salaries rose at the weakest pace in >2 years
• UK data shows home buyer net enquiry balance highest since May last year
• New Zealand Q1 data: Manufacturing sales volumes -2.1% q/q
• Goldman Sachs says widespread adoption of AI puts S&P500 fair value up to 14% higher
• There is circa US$3bn in FX option expiries at 140.00 in USD/JPY at the 10am NY cut today
• Soros' CIO expects more US banks to fail - more problems lurking beneath the surface
• MUFG sees limited scope for USD/JPY to move higher from its current level
• ICYMI: Druckenmiller sees profits down 20-30%, higher terminal Fed rate, but he likes NVDA
• ICYMI: Yellen spoke Wednesday: lowering CPI a 'top priority' & supports crypto regulation
• Forexlive Americas FX news wrap: Bank of Canada surprises with another rate hike
• Trade ideas thread - Thursday, 8 June 2023
• NASDAQ index closes sharply lower

There were yuan deposit rate cuts by a range of Chinese banks today after calls from the authorities to do so. The cuts are aimed at providing a boost to the economy and have sparked renewed speculation of a Loan Prime Rate cut from the People’s Bank of China this month. As a reminder, the Medium Term Lending Facility (MLF) rate is set by the People's Bank of China each month on the 15^th (or the nearest business day if this falls on a weekend) with the Bank’s Loan Prime setting on the 20^th (ditto). The 15^th is a week away, the 20^th nearly two.

The yuan (CNH) had lost ground overnight. USD/CNH had climbed above 7.15 for the first time in 2023 and it retested above there during the session here. The People’s Bank of China is allowing the yuan to slide, the CNY reference rate was set weak (USD/CNY higher) again today.

The news of lower rates in China to spur the economy and the lower yuan likewise provided cross-currents for China and China-proxy trades, such as AUD. Stimulus is a positive but the lower yuan will make imports into China more expensive, not a positive for the global economy. AUD/USD inched a little net higher in a very narrow range. EUR, NZD, GBP, CAD and even yen all similar.

Other news took a back seat to what was happening in China. OK, I exaggerate, there was no other news. Data flow, however, included better than expected Q1 economic growth data (GDP) from Japan and a miss on Australian exports in April.

Asian equity markets:

• Japan’s Nikkei 225 -0.1%

• China’s Shanghai Composite -0.1%

• Hong Kong’s Hang Seng -0.2%

• South Korea’s KOSPI -0.3%

• Australia’s S&P/ASX 200 +0.04%