Geopolitical, Stimulus & Data Cross-Currents Apparent

A downtick in the major global equity indices and a move higher in U.S. Tsy yields biases USD/CNH back towards yesterday’s/YtD high (CNH7.1443), before the bid runs out of some steam and the pair eases back to CNH7.1360.

• Overnight we noted that dips towards CNH7.1100, aided by BBG source reports suggesting that “U.S. Secretary of State Antony Blinken plans to visit China in the coming weeks for talks with top officials, possibly including President Xi Jinping,” were supported.
• The pair moved back above CNH7.1300 in the wake of a much narrower than expected Chinese trade surplus in May, with exports much softer than expected and imports providing a shallower than expected Y/Y fall (more on that here)
• A break above YtD highs and CNH7.1500 would expose bull channel top resistance (located at CNH7.1665 today).
• The CNY mid-point fixing was neutral once again, with the PBoC continuing to refrain from providing any meaningful lean against the recent run of yuan weakness via this mechanism.
• Recently released reserve data showed that China continued to add to its gold holdings in May, in what was a seventh straight month of purchases.