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According to Frances Cheung, CNY has stabilized  as there is hope that some agreement can be reached between China and the US before the US tariff rate that will be applied on USD200bn worth of products is raised to 25% next January.

Key Quotes

“The current 10% rate was at the low end of expectations. Second, China reiterated that it would not devalue the yuan to make its exports more competitive. It has always been their stance, but the latest comments from Premier Li was delivered in a firm and assuring way.”

“With the narrow spread between the market 7- day repo rate and the 7-day OMO reverse repo rate, there is minimal pressure for the PBoC to raise the OMO rate despite an expected 25bp Fed rate hike.”

“The PBoC injected liquidity to the money market on some days recently, with the stance remaining as maintaining adequate liquidity. We expect USD/CNY to trade in ranges in the coming weeks, as markets likely become less sensitive to news headlines on the trade front.”