Support Evident From Strong Equities, Higher Bond Yields

USD/CNH mostly tracked lower post the Asia close, in line with higher beta FX in the G10 space. We saw support sub 6.8550, with the pair last tracking close to 6.8600. CNH ended Monday's session 0.21% firmer against the USD, the first rise in more than a week. Current USD/CNH levels are very close to the 50 and 200 day EMAs, which both sit fairly close to 6.8600. Sub these levels is the 20-day EMA at 6.8250.

• To recap, onshore equites surged close to 2.50% yesterday in terms of the CSI300, outperforming regional peers. Northbound stock connect flows have been positive for the past 3 trading sessions (+6bn yuan). The CSI 300 remains below end of Jan highs.
• This likely aided CNH margins, offsetting some of the headwinds from tensions with the US, with little de-escalation coming out of recent talks.
• The other positive for the yuan was the spike higher in onshore bond yields. The 2yr pushed to 2.45%, +4bps yesterday, while the 10yr rose 3bps to 2.92%. This has seen the US-CH yield spreads move down from recent highs. Firmer equities likely helped, while the 5yr and 1yr LPRs were left unchanged.
• Reuters also noted the authorities provided window guidance around slower lending in February after January's bumper result. Mortgage rates have also fallen this month, back to 2019 lows, see this link for more details.