Both USD/CNH & USD/CNY Sub 200-day MAs, MLF & Nov Activity Figures Due

By late NY trade, USD/CNH was near 7.1100, fresh lows back to mid June for the pair. We firmed modestly into the NY close, back to the 7.1230/40 region, which is where we currently track. This was a CNH gain of 0.21%. Note USD/CNY also dropped sharply, closing at 7.1119, while the NY NEER (J.P. Morgan Index) fell 0.47% to 123.43.

• Thursday moves leave both USD/CNY and USD/CNH sub their respective simple 200 day MAs. A +1% EUR/USD gain, as the ECB struck a less dovish tone compared to the Fed, no doubt spilled over into yuan strength.
• Note as well further signs of support for the China housing market. Both Beijing and Shanghai cut the downpayment for first home buyers (see this link for more details).
• This may have aided yuan sentiment at the margins and comes ahead of the 1yr MLF decision today and Nov activity data. The markets expects a steady MLF at 2.50%. MLF volumes are projected at 975bn yuan (prior 1450bn yuan).
• Nov activity figures are expected to improve in y/y terms, but base effects are favorable. Nov home prices, property sales and the jobless rate are also due.