Risk-On Flows Help Redback Outperform Greenback, Trade Matters Back In Focus

Spot USD/CNH has been moving in tandem with the DXY, as Moderna's upcoming announcement on their Covid-19 vaccination, comments from U.S. President-elect Biden's team downplaying potential for a nationwide lockdown and the finalisation of the RCEP trade pact have supported risk appetite. The pair has shed 234 pips thus far and last trades at CNH6.5767.

• Numerous reports from Chinese state media have celebrate the finalisation of the Regional Comprehensive Economic Partnership, the world's largest regional free trade agreement, signed by China, Japan, South Korea, Australia, New Zealand and the ten ASEAN countries. The deal awaits ratification by some of the parties, which may take another few months. The document includes a clause that allows India to join, should it so wish, despite simmering Sino-Indian geopolitical tensions.
• Axios reported that the outgoing U.S. President Donald Trump is planning new hardline measures against China before his term expires. Trump's administration is expected to frame the steps in such a way that it would be "politically suicidal" for to reverse them.
• Next support is at CNH6.5475, where the rate printed its recent cycle low on Nov 9, and a break below there would clear the way to the round figure of CNH6.5000, which has been intact since mid-2018. Bulls need a rebound above Nov 9 high of CNH6.6495 to get some relief.
• Focus turns to Friday's monthly LPR fixing.