In early European trading on Tuesday, the USD/CNH pair is trading with gentle gains near 6.8905. However, the pair’s potential upside appears circumscribed near a 34-month low amid US tariff confusion.
US President Donald Trump said on Saturday he would raise tariffs from 10% to 15% on US imports from all countries, the maximum level allowed under the law. The decision was made after the US Supreme Court on Friday overturned Trump’s radical global tariffs.
The US president on Monday warned countries against withdrawing from recently negotiated trade deals with the US, saying he would impose much higher tariffs on them under various trade rules. The fear of a renewed trade war may put selling pressure on the US dollar (USD) in the near future.
On Tuesday, the People’s Bank of China (PBOC) left lending rates (LPR) unchanged. The one-year and five-year LPR rates were 3.00% and 3.50%, respectively. This decision was widely expected.
Technical analysis:
On the daily chart, USD/CNH remains below the 100-day EMA, maintaining a broader bearish bias. The 20-day Bollinger midline shifts and limits the bounce, maintaining a mighty short-term tone. The RSI (14) at 31.7 is near oversold, highlighting needy momentum.
The price is hovering just above the lower Bollinger Band at 6.8680, signaling continued bearish pressure and a stretch condition. The bands are downward sloping and moderate in width, indicating continued downside volatility rather than a breakout. A base above the lower band may push the average back towards the midline at 6.9155, while any rebound will meet resistance at the upper band at 6.9633.
(The technical analysis for this story was written with the facilitate of an AI tool.)
PBOC FAQs
The main monetary policy objectives of the People’s Bank of China (PBoC) are to protect price stability, including exchange rate stability, and promote economic growth. China’s central bank also intends to implement financial reforms such as the opening and development of the financial market.
PBoC is state-owned by the People’s Republic of China (PRC), so it is not considered an autonomous institution. The secretary of the Committee of the Communist Party of China (CPC), not the governor, has the key influence on the management and management of the PBoC. However, Mr. Gongsheng currently holds both positions.
Unlike Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its goals. The primary tools include the seven-day repo rate (RRR), the medium-term credit facility (MLF), foreign exchange interventions and the reserve requirement ratio (RRR). However, the China Reference Rate (LPR) is the benchmark interest rate. Changes in LPR directly affect the rates you have to pay on the loan and mortgage market and the interest rates on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese renminbi.
Yes, there are 19 private banks in China – that’s a tiny part of the financial system. According to The Straits Times, the largest private banks are digital lenders WeBank and MYbank, backed by tech giants Tencent and Ant Group. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
