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CNH Outperforms USD Rebound, CNY NEER +1% Higher


USD/CNH got to lows in the 7.1660/70 region post the Asia close before rebounding back towards 7.1900 amid broad USD gains in NY trade. We sit back at 7.1750 in early Friday Asia Pac dealings. For Thursday's session CNH gained 0.78%, significantly outperforming broader USD indices (BBDXY +0.38%). USD/CNY finished up just under 7.1800, while the CNY NEER (J.P. Morgan Index) surged nearly 1%, back to the 120.23 level.

  • The CNH benefited from carry over from yesterday's much stronger than expected CNY fixing, coupled with shifts in macroprudential rules designed to boost corporate capital inflows, Still, some sell-side analysts stated the latter measure was unlikely to turn the tide for the yuan in a meaningful way (as offshore borrowing rates are higher compared to those onshore in China).
  • Local equities finished weaker, the CSI 300 down 0.71%, while in US trade on Thursday the Golden Dragon index fell 0.62%, largely reversing Wednesday's gain.
  • On the data calendar today we have FX settlement data.
  • Yesterday China President XI told former US Secretary of State Henry Kissinger that China is willing to discuss with the US the right way to move forward on progress around bilateral relations (see this link).

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