LNY Holiday Stability Vs. USD Will Please Policymakers

USD/CNH trades loosely in line with levels seen around the start of the LNY holiday period, last CNH7.2185.

• Technically, the pair is trading closer to its recent highs after piercing a key short-term resistance at the Jan 17 peak (CNH7.2322) earlier this week.
• A fresh extension higher would pave the way for a climb towards CNH7.2500. Above there lies the 61.8% retracement of the Sep 8-Dec 29 bear leg (CNH7.2610)
• Conversely, key short-term support lies at the Feb 7 low (CNH7.1888).
• The lack of meaningful LNY vol. in the pair will please policymakers, with the U.S. CPI-inspired uptick in the cross proving to be limited and short-lived.
• The move higher was limited by several China-centric developments (on top of wider macro matters):
• Consumption and travel surrounding the LNY break seem to be positive for the Chinese economy.
• Continued/growing expectation re: deeper policy easing.
• A WSJ report pointing to policymakers deploying firmer support for the property sector.
• Expedited progress re: the whitelisting of financing for property development projects.
• What seems to be growing interest in exploring upside expressions in Chinese equities.
• Hong Kong’s Hang Seng has added a cumulative 3.8% across this week’s 3 trading sessions, while the HSCEI has added ~4.8% over the same window.
• Mainland markets return on Monday.