AUD spikes on firm CNY setting

The People’s Bank of China has set the mid rate for the onshore yuan nearly 13 big figures from the modelled estimate:

• PBOC sets USD/ CNY reference rate for today at 7.0996 (vs. estimate at 7.2267)

It gave AUD a boost (AUD likes a stronger yuan compared to a weaker because it makes Australian exports to China that little bit less expensive). On Friday the PBOC set the yuan at a relatively weaker rate, fuelling speculation that it was back pedalling a little from its very strong yuan policy. The firm set today looks aimed at killing such thoughts.

Also, the PBoC injected funds via OMOs today, they’d backed off from this late last week.

This article was written by Eamonn Sheridan at www.forexlive.com.