Chinese Equity Bid Weighs On USD, Supports Yuan

An early bid in Chinese equities has helped USD/CNH move lower on the day, after an early shunt higher. This has filtered into a wider downtick for the greenback, with the USD at the bottom of the G10 FX performance table.

• There hasn’t been much to highlight on the headline front since the previously flagged BBG sources piece which noted that “the US and Taiwan are planning to announce negotiations to deepen economic ties, people familiar with the matter said, in a fresh challenge to Beijing, which has cautioned Washington on its relationship with the island.”
• A positive start for Chinese equities has likely aided the turn around in the yuan, with the former benefitting from hope re: fresh policymaker support for the Chinese economy, news of record monthly special bond issuance from local governments during May, as they look to support the economy and stronger than expected quarterly earnings data from a couple of the country’s tech giants.
• This has allowed e-minis to find a bit of a base, although the 3 major e-mini futures contracts are still 0.1% softer on the session.
• U.S. Tsys continue to operate in a narrow range.