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CHINA: USDCNH Prints New Yearly High, Extends Above Trendline Resistance

CHINA
EM BulletAPACChinaEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets
  • USD/CNH rose to a fresh 12 month high of 7.3148 overnight, extending the break above downtrend resistance drawn from the 2023 highs. Broader USD gains have been supported by a higher US yield backdrop this week, while China yields continue to track lower, with the 10yr residing below 2.00% at fresh multi decade lows.
  • Analysts continue to assess the potential impact of Trump’s tariff intentions, with the heightened sense of uncertainty leading to a sharp reversal of the record inflows into China-related ETFs that occurred in October.
  • Bloomberg noted that the $7.2 billion iShares China Large-Cap ETF, saw about $2.3 billion in outflows last month, while investors pulled more than $1 billion from the KraneShares CSI China Internet Fund, the largest monthly redemption for both funds on record.
  • Furthermore, PBOC easing expectations, particularly ahead of key China government meetings in Dec, remain a factor weighing on the yuan, while the weekend threat from President-Elect Trump on BRICs countries abandoning the USD should not be overlooked.
  • For USDCNH, 7.3682 and 7.3749 remain the two key upside targets for the pair. Support moves up to 7.2351, the 20-day EMA. Both the composite and services Caixin PMI readings are scheduled tomorrow.
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  • USD/CNH rose to a fresh 12 month high of 7.3148 overnight, extending the break above downtrend resistance drawn from the 2023 highs. Broader USD gains have been supported by a higher US yield backdrop this week, while China yields continue to track lower, with the 10yr residing below 2.00% at fresh multi decade lows.
  • Analysts continue to assess the potential impact of Trump’s tariff intentions, with the heightened sense of uncertainty leading to a sharp reversal of the record inflows into China-related ETFs that occurred in October.
  • Bloomberg noted that the $7.2 billion iShares China Large-Cap ETF, saw about $2.3 billion in outflows last month, while investors pulled more than $1 billion from the KraneShares CSI China Internet Fund, the largest monthly redemption for both funds on record.
  • Furthermore, PBOC easing expectations, particularly ahead of key China government meetings in Dec, remain a factor weighing on the yuan, while the weekend threat from President-Elect Trump on BRICs countries abandoning the USD should not be overlooked.
  • For USDCNH, 7.3682 and 7.3749 remain the two key upside targets for the pair. Support moves up to 7.2351, the 20-day EMA. Both the composite and services Caixin PMI readings are scheduled tomorrow.