The dollar rose against the offshore RMB in early trading session on Monday, once rose over 100 pips to 7.0870 level.
The People’s Bank of China announced that it will lower the 1-year loan prime rate (LPR) by 0.2% to 3.85%, while the 5-year LPR will be lowered by 0.1% to 4.65%. However, as the market has already expected the move, it has not caused much pressure on the RMB nor any positive impact on the market sentiment. Stocks in Asia Pacific market were just mixed on Monday.
The analysis generally believes that China’s situation of the coronavirus outbreak is relatively under controlled which makes the RMB becoming stronger. However, the global situation is not that good and will still affect the Chinese economy severely.
It is currently difficult for judging whether the outbreak in the United States and Europe has “peaked” or not. Undeniably, it is the key concerning point in the financial market.
Even if Trump instructed to restart the economy as soon as possible, but investors are also skeptical as the outbreak is still severe. The sentiment is just very sensitive between risk on and risk off.
Trump expects to reach a consensus with Congress on Monday to provide an additional $300 billion in emergency loans to small US businesses, which also be good to market sentiment in some extent. However, the weakness of oil prices, coupled with a series of bad figures, will still turn the “risk off” for some time.