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CNH Gives Back CPI-Inspired Gains, and Then Some

CHINA
  • Greenback remains bid off the post-CPI lows, with EUR/USD, GBP/USD and AUD/USD all erasing close to the entirety of the data-inspired move higher.
  • USD bounce notable against the CNH, which sees USD/CNH rally to new daily highs of 6.9411 to close the gap with the 200-dma of 6.9599.
  • USD gains mirror the pullback in equity markets, as the e-mini S&P trades back to pre-CPI levels - but CNH has more than reversed the move, with added weight following the Reuters report alongside the NY Open: "big four state-owned banks to cut deposit rate ceiling on some products"
  • The regulator's appeal mimics action taken in April, and should support domestic liquidity, while protecting net interest margins among the Chinese banking sector.

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