USD/CNH continues to juggle around 6.9000 as focus shifts to PBoC policy

• USD/CNH is oscillating around 6.9000 as investors await PBoC policy for fresh impetus.
• A dovish stance is expected on the LPR by the PBoC as the economy is aiming for a recovery.
• The appeal for the USD Index has been trimmed as investors are dubious about the upcoming Fed's policy.

The USD/CNH has continued to auction sideways around 6.9000 in the Asian session. The major is not delivering any action as investors are awaiting the interest rate decision by the People’s Bank of China (PBoC), which is scheduled for Monday.

S&P500 futures are showing minimal losses in the Asian session after a stalwart recovery on Thursday, portraying an improvement in the risk appetite of the market participants. The US Dollar Index (DXY) has delivered a breakdown of the consolidation formed in a narrow range of 104.30-104.60. The appeal for the USD Index has trimmed as investors are dubious about the upcoming monetary policy by the Federal Reserve (Fed) after a decline in the United States inflation and broadening banking turmoil.

Sluggish demand for US government bonds after a confident recovery in the 500-US stocks basket futures has improved returns offered on the same. The 10-year US Treasury yields have surpassed the 3.59% figure.

Going forward, the release of the PBoC’s monetary policy decision will be in focus. Economist at UOB Group suggests that the PBoC could reduce the Loan Prime Rate (LPR) at its next meeting on March 20. They further added, “With the need for further support measures toward the real economy and for 5Y loan prime rate (LPR) to fall further to boost demand for homes, we see the possibility for the 1Y LPR to fall to 3.55% and 5Y LPR to 4.20% in Mar, following the National People’s Congress (NPC).”

Meanwhile, an upside revision in China’s Gross Domestic Product (GDP) forecasts would support the Chinese Yuan. Investment banking firm, Goldman Sachs, has revised its 2023 China GDP projections to 6.0% from the prior estimation of 5.5%.