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Underperforms As Local Equities Remain Under Pressure


USD/CNH got close to 7.3200 post the Asia close on Monday, but pulled back sub 7.3100 by late in the NY session. We currently track near this level, having posted a modest gain (in CNH terms) for Monday's session. USD/CNY closed at 7.3110, while the NEER (J.P. Morgan index) fell by 0.24% to 123.64, as the yuan underperformed the broader USD sell-off.

  • The local data calendar is empty today, with focus resting on tomorrow's Q3 GDP print and September activity figures. The market expects slower y/y GDP growth, but this is driven by base effects, with q/q growth expected to be similar to the Q2 outcome.
  • Today focus may rest on the local equity backdrop, with the CSI 300 finishing at fresh cyclical lows in Monday trade. To recap, the index lost 1.00% to close at 3626.60, fresh lows back to early November last year.
  • This comes despite recent reported sovereign wealth fund buying of local bank stocks and possibly broader support via a stabilization fund (per BBG reports).
  • In Monday US trade we did see the Golden Dragon index rise a modest 0.32%, after falling in the final two sessions of last week.
  • Note that China President Xi Jinping will deliver a keynote speech tomorrow as part of China's Belt and Road forum (per Xinhua News Agency).

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