7.1500 Level Offering Resistance

USD/CNH remains comfortably off earlier highs. We got above 7.1500 in the first part of the session but haven't got close to those levels since. This level appears to be somewhat of a line in the sand, at least from a near term standpoint. Dips sub 7.1200 have been supported though, as broader USD sentiment remains positive against the majors.

• The more modest fixing error in USD/CNY terms, compared to late September, hasn't done much to shift sentiment. Onshore spot has had a very quiet first part of trading, last at 7.1135/40.
• Onshore bond yields are down since the open. The 2yr is back to 2.07%, around 5.5% lower than closing levels prior to the holiday period. The US-CH 2yr spread is back close to cyclical highs (+224bps), but note no cash trading is taking place today in USTs.
• If recent correlations with yield spreads hold, the market will maintain a buy the dip mindset with USD/CNH.
• Onshore equities are lower, but are showing a lower beta to moves elsewhere. The Shanghai composite off around 0.40%. The property sub-index is outperforming though, up 2.35%.