PBoC is expected to set USD/CNY mid-point at 6.7595 (prev. 6.7898)

The daily midpoint is the PBoC's principal signalling instrument for the currency: the fix anchors the permitted trading band, and the signal lies in the direction and size of the move relative to the prior fix and, more importantly, relative to modelled estimates. A firmer fix, as here, has historically been read as resistance to depreciation pressure rather than an attempt to drive appreciation, since episodes in which the fix has been set persistently stronger than models suggest have tended to coincide with periods of capital outflow concern or unease about disorderly moves. The distinction worth drawing is between a fix that merely tracks the overnight move in the dollar and one that deviates from it: the first is passive, the second is a policy statement, and it is the deviation that moves CNH and the offshore-onshore spread. Watch points of established form are the gap between the fix and consensus model estimates, the behaviour of the CNH-CNY basis in the minutes after publication, and whether state bank dollar selling appears at the edges of the band. Sustained firmer-than-expected fixing sequences have in past episodes been accompanied by tightening of offshore liquidity to squeeze shorts. As a daily operational event the signal is incremental; it is persistence across sessions that carries information.