China’s Inflation And US Payrolls Are Topics Of Discussion

(CTN News) – Despite the weakening of the US dollar, the China yuan held steady against it as US yields dipped following comments from Federal Reserve Chair Jerome Powell that reinforced market expectations for rate cuts.

It was Powell’s assertion on Thursday that the US central bank was “not far” from gaining the confidence it requires to begin reducing interest rates.

The dollar index dipped to its lowest level in nearly two months on Friday when the 10-year Treasury yield dropped below 4.1% overnight after dropping below 4.4% over the course of the previous day.

After the central bank of China said it would conduct a survey of some rural lenders’ investments in bonds,

The rally in China’s long-dated bonds has slowed.

As China’s spot yuan continued to hover below 7.2 against the dollar, recent trading volume was light, with traders citing a lack of direction.

In March, the first five trading sessions averaged $23.2 billion in trading volume.

In January, the volume averaged $34.5 billion, and in February, it averaged $27 billion.

The market is currently awaiting US employment data due later in the day, as well as China’s inflation data due on Saturday, in order to assess the Fed’s policy path.

On the eve of the market opening, the People’s Bank of China (PBOC) set a midpoint rate of 7.0978 per US dollar, around which the yuan is allowed to fluctuate within a 2% band. There were more than 850 points higher than Reuters’ estimate of 7.1863, marking the strongest level since Jan. 2.

As of midday, the spot yuan was trading at 7.1923 per dollar, 8 points higher than the close of the previous late session.

The Chinese authorities face challenges from the impossible trinity, as they seek to maintain RMB stability while easing monetary policy and allowing semi-porous capital flows.

Even though the government has set an ambitious growth target for 2024, Nomura analysts believe the PBOC must eventually allow for FX stability or risk running out of reserves.

During this week’s annual meeting of the National People’s Congress, China set a 5% GDP target.

As compared with the previous close of 102.823, the global dollar index fell slightly to 102.819.

In comparison with the onshore spot, the offshore yuan was 91 pips weaker at 7.2014 against the dollar at the time of the report.

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