Tight Range, Even As Broader USD Nudges Lower

CNH is not really making much/any ground vs. the USD today, despite the aforementioned downtick in the BBDXY. Spot last deals little changed on the session, just above CNH 7.1550.

• A few factors have probably limited any appreciation pressures in the yuan.
• This week’s hold of support in the form of the 200-DMA (CNH7.1328 marked off yesterday’s close).
• Net outflows from mainland Chinese equities via the China-HK Stock Connect link (CNY6.2bn on the day), as the space finished the week on the softer side.
• Continued expectation for further PBoC easing. The latest BBG survey consensus looks for a benchmark rate cut in early ’24, although points to other forms of easing in late ’23 e.g. RRR reduction and a cut in the 7-day reverse repo rate.
• The distance already travelled in USD/CNH.
• Continued pessimism re: the Chinese economy, despite the latest round of stimulus/property support speculation.
• Elsewhere, CNH TN Points are back towards the 0 mark, a CNH positive at the margins.