CNH: CNH Lags USD Index Losses, Xi Calls On Efforts To Achieve Growth Target

Like elsewhere, the CNH benefited from late USD weakness through Thursday trade. From highs in the 7.1330/35 region, the pair fell back sub 7.1200 and we track close to this figure level in early Friday dealings. For Thursday's session as a whole CNH gained 0.14%, lagging broader USD index losses (BBDXY and DXY both off a little over 0.40%). USD/CNY spot finished up at 7.1174 for Thursday, while the CNY CFETS basket tracker was down slightly to 98.02 (per BBG). 

• Fresh media speculation on the size of the first Fed cut next week weighed on USD sentiment through US trade, while continued global equity gains supported higher beta plays. As has typically been the case, CNH's beta with respect to such trends remained low.
• For USD/CNH we remain close to the 20-day EMA (near 7.1290), while recent highs at 7.1367 remain intact. Earlier Sep lows were at 7.0735.
• Tomorrow we get August new home price figures, along with the activity prints for the same month. The market expects retail sales at 2.5%y/y (versus 2.7% prior), while IP is projected at 4.7%y/y (prior 5.1%). China President Xi Jinping called on all government levels to help achieve this year's growth target (around 5%) (see this BBG link).
• Our policy team noted late yesterday that the PBoC is seen as cutting the repo rate soon. Government bond trades are also expected to continue in efforts to steepen the yield curve.
• In the equity space, the CSI 300 finished down 0.43%, with the index at fresh lows for the year.