Edging Closer To Levels Where Authorities Issued Intervention Warning

USD/CNH managed to build a base above 7.1500 overnight, although moves above 7.1600 couldn't be sustained. The pair last tracked at 7.1560. There are a number of previous highs that could be in focus between 7.17-7.19, if we see further upside momentum.

• However, as we noted yesterday, USD/CNH has spent little time in this region since the authorities reportedly told state banks to be prepared to sell dollars in the offshore market back in late September.
• The local data calendar remains quiet, although September aggregate credit figures are still due any day now. Fresh support for the economy has come via a fresh injection of funds to policy banks via the Pledged Supplemental Lending (PLF) facility last month (net CNY108.2bn was injected). The was the first net injection from this facility since February 2020.
• Other areas of focus will be the CNY fixing, which didn't lean as aggressively against depreciation pressures yesterday. While overnight the China Golden Dragon Index fell by 5.31%. Further US tech constraints continues to hurt sentiment in this sector.
• Covid case numbers will also be watched, given the recent uptrend in reported infections (highest daily count since early September).