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Fresh USD/CNH Highs, Stock Connect Outflows Tracking Large For Last 3 Sessions

CNH

USD/CNH continues to track higher, we currently sit just below session highs, in the 7.0870/80 region. Onshore USD/CNY spot is through 7.0700 (last near 7.0740). Both pairs are back to highs from early Dec last year.

  • Equity headwinds persist, with China related equities down further today. The CSI300 is off by 0.50% at this stage, threatening fresh YTD lows.
  • Northbound stock connect outflows continue, with a further 5.7bn yuan in outflows so far today. If maintained this would bring net outflows for the past 3 sessions to just over 18bn yuan. This would be the worst 3-day run of outflows since late October last year.
  • Despite fresh highs in USD/CNH, the risk reversal (1 month last 0.4850) and implied vol (last near 5.60%) spaces remain well behaved.

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