Politics was the bombshell news to open the week. US President Biden pulled out of the 2024 contest early on Sunday afternoon, US time, well prior to Asian markets opening. Very early pricing was not overly volatile, early NZ saw the US dollar drop a little. EUR, AUD, NZD, GBP, CAD and even JPY gained a few tics or so. As more Asian centres came towards being online, Australia, Japan, then Hong Kong and Singapore (these final two are in the same time zone) the losses for the USD extended further, but the moves were not large, not at all. US equity index markets opened (Globex on the CME) with ES and NQ up also.

Over the course of the morning the USD bottomed out and all those currencies just mentioned gave back their gains. The biggest loser of the lot was the AUD, which dropped 35+ points from its early high.

The next item of any note to hit was a series of easings from the People’s Bank of China:

  • the PBOC cut the rate on its 7-day reverse report from 1.8% to 1.7%, the first cut since August last year
  • at the same time the PBOC promised support for the CNY, saying it’d strengthen the counter-cyclical adjustment to "better support the real economy"
  • the PBOC then announced it was lowering collateral requirements for medium term lending facility loans, the move is aiming to increase the size of tradable bonds in the market
  • the PBOC followed up with a 10bp cut to each of the one- and five-year loan prime rates

On the LPRs, the one-year rate has been cut to 3.35%

  • prior 3.45%

The five-year rate has been cut to 3.85%

  • prior 3.95%

USD/CNH traded higher, but again its not a huge move.

usdcnh 22 July 2024 wrap 2