September 30, 2019, | AtoZ Markets – The overnight offshore Yuan Hong HIBOR surged 1.2% points to 3.04% and recorded the biggest daily rise year-to-date (YTD) levels. The currency borrowing costs rose in Hong Kong on Monday morning, with the CNH Hong Kong Interbank Offered Rate benchmark (HIBOR) rising across tenors.
The overnight contract jumped to 4.07150% to reach the highest level since October 9th, 2018. It was 58 basis points above the previous fix of 3.48975% on Friday.
The massive hike in the CNH HIBOR suggested tightness in Yuan liquidity offshore. This could mean that shorting the Chinese currency has become more expensive.
On January 29th, 2019, the overnight offshore Yuan HIBOR dropped to 0.33%, which is the lowest level. The reason behind the fall was fears among the overseas investors that Beijing is preparing for a far deeper devaluation in the Yuan.
US-China trade tensions might impact Yuan
We have a macro calendar to kick-off a big week ahead, with the German economic news in the headline which amid Brexit chaos and renewed US-China trade tensions. First up, the German Retail Sales will drop in at 0600 GMT, followed by the Employment data due at 0755 GMT and Preliminary Harmonized Index of Consumer Prices for September at 1200 GMT.
From the UK docket, the Q2 Final GDP revision, Current Account and Total Business Investment data will be reported at 0830 GMT among other minority reports.