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Broader USD Bid, Evergrande Worry & Stock Outflows Underpin USD/CNH

CNH

The broader USD bid has kept USD/CNH underpinned since the Chinese equity close, with Tsys coming under fresh pressure as NY filters in, lending fresh support to the greenback.

  • A quick reminder that the latest uptick in worry re: Evergrande and net outflows from Chinese stocks via the HK-China Stock Connect schemes weighed on Chinese equities/CNH in Asia.
  • USD/CNH sits back above CNH7.3100 as a result, although CNH has been more resilient than most re: the USD bid.
  • A state-backed media outlet ran comments from an FX trader suggesting that the yuan still has the ability remain stable with the Chinese economy continuing to recover, although the trader warned the strength of the USD has the ability to limit redback appreciation.
  • The USD/CNY fixing vs. BBG estimate spread operates just off recent all-time wides, as the PBoC continues to lean against yuan weakness.
  • Meanwhile, CNH points out to 1-year were little changed on the day, trading off recent highs. CNH HIBOR fixings out to 3 months were higher today, but shy of recent peaks, while the 6-month fixing saw a fresh cycle high and 12-month fixing stuck around recent cycle highs.
  • Well-defined technical parameters remain in play for USD/CNH:
  • Key short-term support in USD/CNH lies at CNH7.2392, the Sep 1 low.
  • For bulls, a break of resistance at CNH7.3682, the Sep 8 high, would resume the uptrend and this would open CNH7.3749, the Oct 25 high - a major resistance and the all-time high.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
EM BulletHomepageBulletMarketsEmerging Market NewsForeign Exchange Bullets
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
EM BulletHomepageBulletMarketsEmerging Market NewsForeign Exchange Bullets

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