Redback Hits Multi-Month Highs With Xi/Biden Summit Under Way

Spot USD/CNH has sold off sharply, extending losses upon the breach of support from ascending trendline/Oct 19 low at CNH6.3695/87 and printing worst levels since Jun 1 as a result. The main focus falls on the ongoing virtual summit with Chinese Pres Xi and U.S. Pres Biden, who have just wrapped up the first half of talks.

• The tone of the initial round of comments surrounding discussions between the leaders of the world's two biggest economies could be best described as open but firm. Initial comments were carried by news wires as reporters were allowed to watch the first 10 minutes of the summit. The talks will reopen for the second half shortly.
• Separately, China's NDRC warned that some areas may witness natural gas shortages during peak hours. They also requested State Grid prioritise green power trading.
• The PBOC set their central USD/CNY mid-point at CNY6.3924 today, 4 pips above sell-side estimate, which has had no material impact on the yuan.
• Spot USD/CNH last trades -157 pips at CNH6.3672 as we type, still comfortably below key support levels outlined above. The next bearish target is provided by May 31 low of CNH6.3525. Meanwhile, a rebound above Nov 11/Oct 29 highs of CNH6.4077/6.4104 would give bulls some reprieve.