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CNH Offered as US Markets Conspire Against the Currency

CNH
  • With equities lower, US yields higher and the dollar on the front foot, USD/CNH is pressing to new daily highs, with spot now approaching horizontal congestion resistance at 7.1774-78. Today's move higher has also topped the 50-dma of 7.1714 and a close above this mark today would be a bullish development.
  • CNH slipped overnight on the poorer-than-expected Caixin PMI release, which unexpectedly signalled contraction of 49.2 against 50.1 forecast. New home sales data were also a soft spot, with the value of new home sales down over 33% on the year.
  • More signs of policy support emerged overnight, with the State Council urging city admins to introduce more property-oriented support as well as a new notice detailing efforts to juice credit availability for the private sector - but both reports failed to prop the currency. Local equities also finished lower, with consumer discretionary, real estate and healthcare names the poorest performers.
  • The reactivity to today's Manufacturing release turns focus to Thursday's services and composite data.

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