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Housing Measures Boost Equities But Not FX, LPRs Seen On Hold Today

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USD/CNH traded to 7.2200 late in Asia Pac trade on Friday but we rebounded from there, up above 7.2360, before stabilizing in the low 7.2300 region. Onshore spot ended the Friday session at 7.2243. CNH lost 0.15% for Friday's session, and was around flat for last week, underperforming softer USD trends seen elsewhere.

  • For USD/CNH we are close to the 20 and 50 day EMAs. The 50-day sits back near 7.2255. The 200-day is close to 7.2020.
  • The rise in US yields on Friday, amid a steeper curve, as Fed talk remained cautious likely weighed on CNH at the margins. The underperformers in the G10 space last week were low yielders in terms of JPY and CHF, which the yuan also falls
  • Market focus will likely be on digesting the housing measures announced late on Friday, around easier mortgage conditions and local governments purchasing unsold land and housing. (see these links, here, and here, as well as here). Real estate equity indices finished up very strongly on Friday (CSI 300 sub index up 9.13% for the sector). Aggregate equity indices were up around 1%.
  • The measures are seen as a step in the right direction, albeit not enough to clear the large stock of unsold housing inventory (see this BBG link). It followed fairly weak housing market data released on Friday, while house price falls accelerated for April.
  • Today we have the 5yr and 1yr LPRs on tap. No change is expected in either rate (5yr currently 3.95%, the 1yr at 3.45%).
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USD/CNH traded to 7.2200 late in Asia Pac trade on Friday but we rebounded from there, up above 7.2360, before stabilizing in the low 7.2300 region. Onshore spot ended the Friday session at 7.2243. CNH lost 0.15% for Friday's session, and was around flat for last week, underperforming softer USD trends seen elsewhere.

  • For USD/CNH we are close to the 20 and 50 day EMAs. The 50-day sits back near 7.2255. The 200-day is close to 7.2020.
  • The rise in US yields on Friday, amid a steeper curve, as Fed talk remained cautious likely weighed on CNH at the margins. The underperformers in the G10 space last week were low yielders in terms of JPY and CHF, which the yuan also falls
  • Market focus will likely be on digesting the housing measures announced late on Friday, around easier mortgage conditions and local governments purchasing unsold land and housing. (see these links, here, and here, as well as here). Real estate equity indices finished up very strongly on Friday (CSI 300 sub index up 9.13% for the sector). Aggregate equity indices were up around 1%.
  • The measures are seen as a step in the right direction, albeit not enough to clear the large stock of unsold housing inventory (see this BBG link). It followed fairly weak housing market data released on Friday, while house price falls accelerated for April.
  • Today we have the 5yr and 1yr LPRs on tap. No change is expected in either rate (5yr currently 3.95%, the 1yr at 3.45%).