USD/CNH prints biggest single-day gain since August, eyes PBOC rate decision
- USD/CNH rose sharply on Thursday on broad-based demand for dollars.
- PBOC is expected to cut rates by five basis points.
USD/CNH jumped 1.16% on Thursday, confirming its biggest single-day percentage gain since Aug. 5, 2019.
The Chinese currency fell sharply amid the global dash for the US dollar. The greenback rallied across the board as worries about the negative impact of the coronavirus pandemic on the global economy saw investors sell everything to secure short-dated funding or dollar liquidity.
PBOC rate decision
The People's Bank of China (PBOC) may is widely expected to cut its benchmark lending rate (the one-year loan prime rate) on Friday to 4% from the current 4.05% to offset the massive economic fallout of the coronavirus crisis.
Central banks from Australia to Canada have recently cut launched easing programs to inject massive amounts of liquidity into the system.
A bigger-than-expected PBOC rate cut could bolter the bearish pressure around the offshore Yuan (CNH) and push the USD/CNH pair to fresh multi-month highs above 7.1652 (Thursday's high).
At press time, the pair is trading near 7.15, representing marginal losses on the day.