April 30, 2024 22:38 GMT
Holding Above 7.2500, Politburo Vows To Support Demand, Onshore Markets Closed
CNH
USD/CNH couldn't sustain gains above the 7.2550 level on Tuesday. The pair tracks near 7.2540 in early Wednesday dealings. Onshore spot finished up at 7.2411. A reminder that onshore markets are closed for the Labor day holiday period from today until Friday (markets re-open on Monday).
- CNH lost 0.15% for Tuesday's session, outperforming the stronger USD levels more broadly elsewhere (BBDXY up 0.60%). We remain close to the 20-day EMA for USD/CNH.
- Late yesterday headlines crossed from the April Politburo meeting. There was a continued focus on reform, economic challenges, the need to extinguish debt-linked risks and support for demand. The Politburo also highlighted the potential for both policy rate & RRR cuts going forwards.
- Most China watchers already looked for further monetary easing during ’24, but the comments may deepen/front load expectations for looser monetary policy in Q2. See these links, here and here for more details.
- Local bond yields finished lower yesterday, the 2yr CGB yield off nearly 5bps, the 10, -4bps.
- The equity tone ended weaker for the CSI 300, off 0.54% yesterday, while the Golden Dragon index, in US trade, fell over 3.2%, its first decline in 7 sessions. Broader equity weakness was a likely drag.
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