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Holding Close To 7.3100, CNH Outperforms Stronger USD Trend

CNH

USD/CNH was range bound post the Asia close on Tuesday. The pair oscillated between a rough 7.3050/7.3150 range and we currently track near 7.3100. This left CNH modestly firmer for Tuesday's session, bucking the stronger USD trend (the BBDXY rose 0.32%). USD/CNY closed at 7.3112, not too far from the upper end of the daily trading limit (+2% above yesterday's 7.1727 fixing level). The CNY NEER (J.P. Morgan) continued to rise, up a further 0.28% to 123.39.

  • On the data front today we have August industrial profits on tap. The prior outcome was -6.7% y/y, there is no consensus for the print.
  • For USD/CNH focus will be on today's USD/CNY fix, which has remained wedged very close to 7.1730 in recent sessions. We are approaching the Golden Week holiday period, which kicks off this Friday.
  • CNH liquidity/funding has also remained tight, making it more expensive to short the currency. The 1 month implied yield on CNH sits at 4.59%, after getting above 5% yesterday.
  • In the equity space, the Golden Dragon index lost 0.85% in Tuesday US trade. To recap, onshore equities fell 0.58% yesterday in terms of the CSI 300, with the index sub the 3700 level once again.
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