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CHINA: CNH Strength Caps USD/CNY Rally in Late Asia Trade

CHINA
  • CNH seeing some support in recent trade, with USD/CNH slipping well off the daily highs despite few headline or newsflow drivers. Worth recalling that last week USD/CNH rallied sharply across both the Wednesday and Thursday sessions, only for the rally to pause on Friday amid reports of state-banks selling dollars to provide some support to the CNY. The latest bout of price action could be suggestive of further state bank USD sales.
  • This works against earlier price action in CNY that had seen the currency trade weaker, and approach the 2% daily trading range. The CNY fix remains a particular point of focus - while the daily fix showed some signs of stabilising the currency last week, the pursuit of managed and measured CNY depreciation remains evident - with today's fix and upper bound for USD/CNY the highest since November of last year.

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