China’s PBoC lowered the one-year loan prime rate (LPR) by 5bps to 3.65% today. The five-year LPR rate, which is used to price mortgages, was slashed by 15bps to 4.30%.
The larger cut is the 5-year rate was seen as for addressing the problems in the housing markets. The asymmetry is also for giving additional boost to long-term financing demand.
USD/CNH’s up trend from 6.3057 resumed last week by breaking through 6.8372 high. But that’s more about the broad based rally in Dollar than the weakness in Yuan. Anyway, the up trend could be heading towards 61.8% projection of 6.3057 to 6.8273 from 6.7159 at 7.0444 in the medium term next, that is, above 7 handle.
