ForexLive Asia-Pacific FX news wrap: People’s Bank of China leave prime rates unchanged

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• UBS give 3 reasons Chinese stocks look attractive now
• European Central Bank President Lagarde speaking Monday, but not on the economy or policy
• USD/JPY to trade in 146-150 range, with greater than normal volatility
• Are oil prices truly reflecting the geopolitical risks in the Red Sea?
• PBoC Loan Prime Rates (LPR) are unchanged @ 1 year 3.45% & 5 year 4.20%. As expected
• PBOC sets USD/ CNY reference rate for today at 7.1105 (vs. estimate at 7.1870)
• Houthi attacks in Red Sea causing greater supply chain damage than early pandemic
• Bank of Japan statement due Tuesday – no change expected, but the BOJ does like a surprise
• ICYMI: META to spend big on Nvidia cards, will have 350K Nvidia H100 GPUs by end ’24
• Bridgewater Associates’ offerings in China in demand, while local funds face challenges
• Weekend: Russian energy firm Novatek suspended some operations at Baltic export terminal
• Russia passed Saudi Arabia as biggest supplier of crude oil to China in 2023
• US & UK talks on intensifying targeting Houthis in Yemen. Risk is escalation with Iran.
• US 2024 Presidential Election will be Biden vs. Trump (Desantis drops out, Haley wildcard)
• Trade ideas thread – Monday, 22 January, insightful charts, technical analysis, ideas
• Monday morning open levels – indicative forex prices – 22 January 2024
• Weekly Market Outlook (22-26 January)
• JP Morgan are now forecasting sooner rate cuts from the ECB (starting in June), and deeper

The
focus for the session was on the People’s Bank of China decision on
its Loan Prime Rates (LPRs). Last week the PBoC left its Medium-term
Lending Facility (MLF) rate unchanged, an indication that LPRs would
also be untouched. And that proved to be the case:

3.45%
for the one year, this was last cut in August 2023 from 3.55%

4.20%
for the five year, this was last cut in June 2023 from 4.30%

for
completeness, the MLF rate is currently 2.5%, this was last cut in
August 2023 from 2.65%

In
response to the announcement USD/CNH
dipped to hit 7.1964, the highest for the offshore yuan in nearly 7
days, but it soon retraced to touch around 7.2080.

In
US political news Ron DeSantis quit the race for his party’s
nomination to run for President. This leaves only Nikki Haley and
Trump in the running, with Haley an underdog.

Data
and news flow was otherwise absent.

The
US dollar lost ground against much of major FX on the session.
USD/JPY led the way, down to under 147.80 at one stage. Ranges across
major FX were small only.

China
mainland and Hong Kong stocks traded heavily again.