Yuan Hits 3-Year High on Iran Ceasefire

Market Snapshot

Asset	Level	Change
Shanghai Composite	3,987.56	+2.77%
CSI 300	4,589.94	+3.36%
Hang Seng	25,116.53	-0.70%
TAIEX	33,229.82	+2.02%
USD/CNY	6.83	-0.79%
USD/HKD	7.83	-0.03%
Copper	5.75	+3.76%
Brent Crude	96.26	-11.91%
Gold	4,745.00	+1.89%
Bitcoin	71,518.79	-0.59%
China 2Y Govt Yield	-	-
China 10Y Govt Yield	-	-

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
Inflation Rate Year-over-Year	1.30	1.20	17:30
Inflation Rate Month-over-Month	1	-0.20	17:30
Producer Price Index Year-over-Year	-0.90	0.40	17:30

Yuan strengthened to three-year high on Iran ceasefire, lifting mainland equities while Hong Kong dipped on tech weakness.
Taiwan stocks rose on semiconductor demand, but reserves fell sharply from currency interventions.
Energy disruptions spurred China's crude quota hikes and coal firms' pivot to chemicals.

Yesterday's Recap

Mainland China equities rallied, with the Shanghai Composite up 2.77% to 3,987.56 and CSI 300 surging 3.36% to 4,589.94, fueled by yuan gains and fiscal support hopes after the Iran ceasefire. Hong Kong's Hang Seng fell 0.70% to 25,116.53, dragged by tech profit-taking despite risk-on sentiment. Taiwan's TAIEX climbed 2.02% to 33,229.82, bolstered by semiconductor strength and AI orders, though foreign reserves dropped the most since 2011 due to central bank interventions.

USD/CNY declined 0.79% to 6.83, reflecting yuan appreciation from eased geopolitical risks, while USD/HKD slipped 0.03% to 7.83 under stable peg conditions. Commodities showed mixed moves: copper gained 3.76% to 5.75 on China demand optimism, Brent crude dropped 11.91% to 96.26 amid supply relief, gold rose 1.89% to 4,745.00 as a safe haven, and Bitcoin eased 0.59% to 71,518.79. No major macro data was released in Greater China, but headlines noted banks pushing yuan's global role and PBoC fixing USD/CNY at 6.8854, above estimates and prior 6.8929.

Cross-strait flows held steady amid ongoing energy and trade monitoring.

The Day Ahead

China's inflation figures lead the agenda, with year-over-year CPI consensus at 1.2% (previous 1.3%), possibly indicating cooling pressures that may prompt PBoC easing. Month-over-month CPI is expected at -0.2% (previous 1%), driven by seasonal and demand factors. Producer Price Index year-over-year is forecast at 0.4% (previous -0.9%), suggesting potential easing of factory deflation if commodity trends persist.

These are set for release at 17:30 ET, which could impact yuan and stocks if they highlight disinflation. No key events for Hong Kong or Taiwan, but geopolitical developments may influence trade and sentiment. Watch for State Council updates on stimulus in response to these data.

Other Economic Notes

Middle East disruptions continue affecting energy strategies, with China granting extra crude import quotas to independent refiners to sustain fuel production. Coal companies are shifting toward chemicals to offset oil supply constraints from the conflict. Hopes for China's LNG demand rebound are fading despite the ceasefire, as analysts caution on lingering effects.

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Other Economic Notes (continued)

Taiwan's central bank interventions led to the steepest reserves decline in nearly 15 years, aimed at stabilizing the currency amid volatility. Banks are actively promoting yuan internationalization to enhance its global standing amid FX fluctuations.

Global Macro News

The Iran ceasefire reduced tensions, driving yuan to a three-year high and supporting Asian equities, though war impacts limit China's LNG recovery. Fed's Goolsbee highlighted stagflation risks from the Iran conflict, potentially affecting Greater China's exports via dollar strength and energy prices. Eurozone PMI showed growth at a 9-month low due to rising costs, which could weaken demand for Chinese and Taiwanese goods.

Japan's yen weakened on Takaichi's policy shift toward more spending, possibly aiding Greater China exporters in the region. UK's sterling stayed near early March levels against the euro but trailed the dollar on local risks, impacting Hong Kong investment flows. South Korea's finance ministry vowed bold steps against won volatility, similar to Taiwan's reserve actions.

Bangladesh's March PMI indicated sluggish growth from manufacturing contraction, signaling emerging market challenges that may affect Greater China's supply chains. Canada's RBC expanded travel rewards, while Laurentian Bank detailed repositioning, but these have limited direct ties. China's Zijin cleared Canadian security review for Allied Gold acquisition, easing cross-border M&A.

Overall, these factors underscore Greater China's emphasis on internal stimulus to counter global headwinds.

Greater China Central Banks Watch

PBoC set USD/CNY at 6.8854, above Reuters' 6.8773 estimate and prior 6.8929, indicating support for yuan strength post-ceasefire, with no MLF or LPR changes but liquidity tools monitored for easing signals. State Council maintains dovish stance on fiscal aid, potentially including RRR cuts if deflation lingers. HKMA kept USD/HKD near 7.83 with sufficient liquidity, showing no peg stress from recent moves.

Taiwan's CBC prioritized FX interventions, reflected in March reserves drop, to manage currency amid energy costs and chip exports. No rate changes across the banks, but CBC's steady policy supports tech sector resilience despite disruptions. PBoC focuses on yuan stability for international elevation, HKMA tracks U.S.

rates for peg effects, and CBC watches cross-strait dynamics for further actions if trade balances shift.

Greater China Macro Daily(Beta Mode)