Beat In Caixin M'fing PMI Lends Support To Redback

Spot USD/CNH has erased its earlier uptick after a surprise improvement in Caixin M'fing PMI and an in-line PBoC fix. The rate last operates at CNH6.6911, some 50 pips shy of neutral levels and slightly away from session lows.

• Caixin M'fing PMI improved to 53.6 from 53.0, topping forecasts of 52.8. The index rose to its best level in almost a decade, with Caixin flagging a sharp increase in output amid quick increase in total new work.
• The Caixin Survey came after China's official PMI data released over the weekend. Official m'fing gauge showed a marginal deceleration in expansion, while non-m'fing index suggested faster growth.
• Chinese state media pointed to a tense situation across the Taiwan Strait after the U.S. decided to sell arms to the self-ruled island. The newspaper cited a report from Taipei-based Liberty Times as noting that PLA warplanes flew over the Strait on at least 25 out of 31 days of October, "setting a new record for frequency this year".
• Elsewhere, Qiushi Journal published an old speech from Chinese Pres Xi, in which the leader highlighted the need for setting up "independent, controllable, safe and reliable" supply chains.
• Bears keep an eye on Oct 21 cycle low of CNH6.6278 and a break here would open up the 61.8% retracement of the 2018 - 2020 rally/Jul 10 low/round figure support at CNH6.0030/04/00. Bulls look for a rebound above Oct 28 high of CNH6.7378, which would shift focus to the 23.6% recovery of the YtD slide/Oct 13 high at CNH6.7620/53.
• Chinese Caixin Services & Composite PMIs are due Wednesday. After that, focus turns to Friday's flash BoP current account balance and Saturday's trade data.