CNH: USD/CNH Under 7.09 Amid Broader USD Weakness, CNY Fixing In Focus

USD/CNH sits under 7.09 in early Friday dealings, with CNH up 0.33% for Thursday's session. Broader USD sentiment was softer, with the DXY and BBDXY indices lower as US yields ticked down. Intra-session lows from Thursday came in near 7.0870, so we aren't too far away from those levels. Downside focus is likely to rest on late August lows of 7.0710. On the topside, earlier September highs came in just above 7.1300. Spot USD/CNY Thursday trade just under 7.0900.

• The CNY CFETS basket tracker was still weaker for Thursday's session, off 0.08%, the third straight drop for the index (per BBG). We are now back under 98.00.
• As we noted yesterday a softer USD backdrop amid rising Fed easing expectations could see renewed focus on yuan underperformance on crosses, given domestic economic headwinds in China. A lot though will depend on how the US NFP print unfolds tonight in the US.
• The PBoC focus remains on providing support to the economy, with an official noting late yesterday that there is room for further RRR cuts. See this link.
• Today there will be some focus on the USD/CNY fixing. Yesterday's lower than expected outcome (in USD/CNY terms with a fixing error of -34pips), helped fuel fresh CNH gains, as it signaled less push back from the authorities on a steady yuan. The previous sessions had generally seen close to neutral fixing outcomes. Another downside surprise today for the USD/CNY fixing (of similar magnitude to yesterday), may see late August lows in USD/CNH targeted.
• The local data calendar is empty today, with FX reserves out tomorrow. Next week delivers inflation data Monday, trade figures on Tuesday. Also due it August aggregate credit/finance report.