Pre-Holiday Resilience Noted

USD/CNH looks to the move away from best levels in the USD, testing early Asia-Pac lows, but sticking to a contained range thus far.

• The redback had outperformed peers, with USD/CNH flat to a touch lower on the day during the Asia/early Europe bid in the USD.
• We note a couple of factors here:
• The mid-point USD/CNY fixing saw the PBoC deploy another record lean against CNY weakness (as monitored by the spread between the sell-side estimate provided by BBG and actual fixing outcome).
• An apparent focus on FX stability ahead of the Golden Week holiday.
• Well-documented Chinese economic headwinds remain evident. The latest survey from the Securities Times indicated Q3 GDP growth levels of sub-5%, although there seems to be continued hope of an economic rebound in Q4, keeping the official ’23 GDP target of around 5% in play.
• Well-defined technical parameters remain in place 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 open CNH7.3749, the Oct 25 high - a major resistance and the all-time high.