USD/CNH found selling interest above 7.1500 yesterday/overnight. We dipped towards 7.0900 but found support, amid broad USD weakness. The pair last at 7.1030. A reminder that China onshore markets are closed all this week for the golden week celebrations. Hong Kong markets are also closed today.
- As we noted last week, USD/CNH may stick to recent ranges following last week's intervention warning.
- After touching fresh YTD highs (above 9%), the 1 month implied vol is lower at 8.50%. The 1 month risk reversal is also no longer trending higher. The pair was last back at +1.2325.
- The China Golden Dragon index rose 0.62% overnight, underperforming the broader equity bounce. The index remains just under 6230, with dips sub 6000 this year generally support.
- There is more optimism around the property market outlook, as measures continue to be unveiled to boost the sector, see this link for more details. We are yet to see this feed into a meaningful bounce in key commodities like iron ore though.