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CNH: USD/CNH Sub Tuesday Highs, Yuan Basket Higher, Profits Data Today

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USD/CNH tracks just under 7.2580 in early Wednesday dealings. Earlier highs above 7.2700 in Tuesday trade, post Trump tariff threats, held, with the pair spending most of the US session in a 7.2550/7.2650 range. CNH lost 0.15% for Tuesday's session, broadly in line with the BBDXY's 0.23% rise. Spot USD/CNY finished up at 7.2502, after getting close to 7.2600 in earlier Tuesday trade. The CNY CFETS basket tracker nudged a little higher to 100.24, with the yuan still outperforming broader USD trends at this stage. 

  • For spot USD/CNH, upside focus will rest on Tuesday's high of 7.2728. the pair isn't yet in overbought territory based off the RSI (14). The 20-day EMA continues to trend higher and was last near 7.2130. Monday lows in the pair were at 7.2362.
  • BBG notes that state banks were offering USD liquidity yesterday in the onshore spot market. YTD highs in USD/CNY spot sit at 7.2775.
  • The USD/CNY fixing remains wedged under 7.2000 for now, and while the fixing error is wider (near -500pips in USD/CNY terms) we got well beyond -1000pips earlier this year.
  • So there is scope in the current environment to push back against yuan depreciation pressures via this mechanism. The USD/CNY fixing has spent little time above 7.2000 historically, see the chart below. The authorities may also be waiting to see what the Trump administration delivers around tariffs in early 2025.
  • On the data front today we have Oct China industrial profits. The prior y/y print was -27.1%. 

Fig 1: USD/CNY Fixing - Little Time Above 7.2000 Historically 

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USD/CNH tracks just under 7.2580 in early Wednesday dealings. Earlier highs above 7.2700 in Tuesday trade, post Trump tariff threats, held, with the pair spending most of the US session in a 7.2550/7.2650 range. CNH lost 0.15% for Tuesday's session, broadly in line with the BBDXY's 0.23% rise. Spot USD/CNY finished up at 7.2502, after getting close to 7.2600 in earlier Tuesday trade. The CNY CFETS basket tracker nudged a little higher to 100.24, with the yuan still outperforming broader USD trends at this stage. 

  • For spot USD/CNH, upside focus will rest on Tuesday's high of 7.2728. the pair isn't yet in overbought territory based off the RSI (14). The 20-day EMA continues to trend higher and was last near 7.2130. Monday lows in the pair were at 7.2362.
  • BBG notes that state banks were offering USD liquidity yesterday in the onshore spot market. YTD highs in USD/CNY spot sit at 7.2775.
  • The USD/CNY fixing remains wedged under 7.2000 for now, and while the fixing error is wider (near -500pips in USD/CNY terms) we got well beyond -1000pips earlier this year.
  • So there is scope in the current environment to push back against yuan depreciation pressures via this mechanism. The USD/CNY fixing has spent little time above 7.2000 historically, see the chart below. The authorities may also be waiting to see what the Trump administration delivers around tariffs in early 2025.
  • On the data front today we have Oct China industrial profits. The prior y/y print was -27.1%. 

Fig 1: USD/CNY Fixing - Little Time Above 7.2000 Historically 

Keep reading...Show less