CNH Lags Broader USD Sell-Off, China Banks To Cut Deposit Rates Further

USD/CNH pulled back from highs above 7.1600, dropping back to 7.1350 by the NY session, as US yields fell on downward GDP revisions. We stabilized from there and track near 7.1430 in early Friday dealings. Thursday's 0.10% gain for CNH was modest compared to the BBDXY's 0.60% fall. USD/CNY finished up at 7.1378, while the NEER (J.P. Morgan index) fell 0.22% back to 123.07.

• The NEER is back to mid Nov levels as the yuan underperforms this latest bout of USD weakness.
• China banks will cut deposit rates for a third time this year, with headlines crossing late yesterday (see this BBG link for more details). PBoC Governor Pan also stated the central will maintain reasonable credit growth and optimize its structure (BBG).
• A measure of FDI showed continued slowing momentum of such flows into China, although other data showed China's share of global payments rising per SWIFT data. CNY was the 4th most used currency (4.61%), surpassing the yen in the month of November.
• In the equity space, the Golden Dragon index rebounded 3.16% in Thursday US trade. This followed strong onshore gains yesterday, the CSI 300 closing 1.01% higher.