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Another YTD High For USD/CNH, Mainland Stock Outflows Persist

CROSS ASSET

The latest move higher in U.S. Tsy yields has allowed USD/CNH to test CNH7.1400, as it registered another fresh YtD high. A quick reminder that the surprising expansionary reading in the latest Chinese Caixin manufacturing PMI (pointing to some SME performance divergence vs. the larger companies covered in the official reading) provided some brief respite for the yuan in the Beijing morning, before the move faded without a meaningful challenge of CNH7.1000.

  • Initial technical resistance comes in at CNH7.1500, with any break above exposing the upper boundary of the current trend channel (located at CNH7.1557 today).
  • Light net sales of mainland Chinese equities via the Hong Kong Stock Connect schemes (CNY1.8bn) revealed continued aversion surrounding Chinese exposure on the part of international investors, even with the aforementioned data beat registered, as worry re: the Chinese economic rebound remains evident.
  • Still, the benchmark CSI 300 managed to register a modest (0.2%) uptick on the day, to close a little above the recently registered YtD lows.
  • Benchmark Chinese interest rates (10-Year CGB yields and 5-Year IRS) eased a touch, as participants looked through the data beat, applying further weight to the yuan.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
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MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
HomepageEquitiesAT&T Market NewsBank of America Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

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