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CNH: CNH Underperforms Softer USD Tone, CNY Basket Edging Off Recent Highs

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USD/CNH pulled back close to 7.3350 after the softer US core CPI read. However, we quickly rebounded back above 7.3500 and track just under this level in early Thursday dealings. CNH was little changed for Wednesday's session, underperforming softer USD indices (BBDXY down around 0.20%). USD/CNY finished up above 7.3300, still near recent highs. The CNY CFETS basket tracker lost 0.12%, to be back near 101.50 (per BBG). 

  • Proximity to Trump's inauguration at the start of next week is likely helping keep USD/CNH dips supported, as markets are mindful of early tariff/trade risks form the new US administration.  
  • Recent ranges in USD/CNH continue to hold, the 20-day EMA support point is just above 7.3300, while upside moves have run out of steam above 7.3600 so far in 2025.
  • EUR/USD failure to hold above 1.0300 may have also weighed on CNH sentiment. The USD/CNY fixing is likely to remain relatively steady today, but the fixing error may be a little narrower given softer USD indices from Wednesday trade.
  • The local data calendar is empty until tomorrow's Q4 GDP print and Dec activity figures. We also have Dec house price figures.
  • In the cross asset space, we had local equities pull back on Wednesday, the CSI 300 off 0.64%, but we remain above recent lows, with regulators aiming to support sentiment. Local yields have edged away from recent highs, although more so at the back end of the curve. Yesterday's very large OMO liquidity injection helped stabilize short term money market rates. 
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USD/CNH pulled back close to 7.3350 after the softer US core CPI read. However, we quickly rebounded back above 7.3500 and track just under this level in early Thursday dealings. CNH was little changed for Wednesday's session, underperforming softer USD indices (BBDXY down around 0.20%). USD/CNY finished up above 7.3300, still near recent highs. The CNY CFETS basket tracker lost 0.12%, to be back near 101.50 (per BBG). 

  • Proximity to Trump's inauguration at the start of next week is likely helping keep USD/CNH dips supported, as markets are mindful of early tariff/trade risks form the new US administration.  
  • Recent ranges in USD/CNH continue to hold, the 20-day EMA support point is just above 7.3300, while upside moves have run out of steam above 7.3600 so far in 2025.
  • EUR/USD failure to hold above 1.0300 may have also weighed on CNH sentiment. The USD/CNY fixing is likely to remain relatively steady today, but the fixing error may be a little narrower given softer USD indices from Wednesday trade.
  • The local data calendar is empty until tomorrow's Q4 GDP print and Dec activity figures. We also have Dec house price figures.
  • In the cross asset space, we had local equities pull back on Wednesday, the CSI 300 off 0.64%, but we remain above recent lows, with regulators aiming to support sentiment. Local yields have edged away from recent highs, although more so at the back end of the curve. Yesterday's very large OMO liquidity injection helped stabilize short term money market rates.