Outperforming USD, USD/CNH Back Below CNH7.30

USD/CNH briefly showed below CNH7.2850, before retaking CNH7.29, outperforming the greenback on the day even as the BBDXY ticks higher.

• The move below CNH7.30 came after the pair held above the level during the bulk of the 8-day Chinese holiday period.
• The post-holiday resumption of CNY mid-point fixings (and continued lean against yuan weakness) would have aided the yuan in the background, although we didn’t see a meaningful move there.
• A recovery from early lows in Chinese equity benchmarks provided second-round support as Europe started to settle in.
• CNH benefitted further on news that Chinese President Xi will meet with U.S. Senators (including majority leader Schumer) today. The meeting had been touted as a possibility in recent days, but still provides another positive in the trend re: slowly thawing Sino-U.S. relations.
• Disappointing high frequency housing sales data and domestic economic data covering the holidays didn’t really dent the yuan, neither did the early weakness in mainland equities.
• Some quarters have started to call for deeper easing (again).
• Focus continues to fall on background support, with CNH TN points off pre-holiday lows.
• Well-defined technical parameters remain in play for USD/CNH:
• Key short-term support in USD/CNH lies at CNH7.2392, the Sep 1 low.
• For bulls, a break of resistance at CNH7.3682, the Sep 8 high, would resume the uptrend and this would open CNH7.3749 - a major resistance and the all-time high.