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USD/CNH Above 7.2600, Focus On CNY Fix Today, CPI & PPI Prints Also Due

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USD/CNH is tracking near 7.2620/25 in early Thursday trade. CNH lost 0.33% for Wednesday's session, amid broad USD gains post the stronger than expected US CPI print. Still, we outperformed the BBDXY's 0.75% gain. USD/CNY spot ended up at 7.2343, so just under the upper daily trading band limit (7.2378).

  • Focus today will rest on the fixing outcome, which has been close to 7.0950 in recent weeks. The bias will be for a higher outcome, given USD gains through Wednesday's NY session. Still, the authorities will likely want to control the pace of depreciation.
  • For USD/CNH, a break above recent highs in the 7.2660/70 region could see 7.2820 targeted, highs from late March. On the downside, the 20-day EMA sits back near 7.2410.
  • US-CH yield spreads continue to track higher. The 2yr spread is beyond +310bps. We didn't see much fallout for China local government bond yields post yesterday's Fitch ratings outlook downgrade.
  • On the data front today we have the Mar CPI and PPI prints. The market expects 0.4% y/y for CPI (prior was 0.7%), while for PPI the consensus rests at -2.8% y/y (versus -2.7% prior). We also still await Mar new loans/aggregate finance data.
  • Goldman Sachs raised its China 2024 growth forecast to 5% from 4.5% in light of the recent PMI beats (BBG).
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USD/CNH is tracking near 7.2620/25 in early Thursday trade. CNH lost 0.33% for Wednesday's session, amid broad USD gains post the stronger than expected US CPI print. Still, we outperformed the BBDXY's 0.75% gain. USD/CNY spot ended up at 7.2343, so just under the upper daily trading band limit (7.2378).

  • Focus today will rest on the fixing outcome, which has been close to 7.0950 in recent weeks. The bias will be for a higher outcome, given USD gains through Wednesday's NY session. Still, the authorities will likely want to control the pace of depreciation.
  • For USD/CNH, a break above recent highs in the 7.2660/70 region could see 7.2820 targeted, highs from late March. On the downside, the 20-day EMA sits back near 7.2410.
  • US-CH yield spreads continue to track higher. The 2yr spread is beyond +310bps. We didn't see much fallout for China local government bond yields post yesterday's Fitch ratings outlook downgrade.
  • On the data front today we have the Mar CPI and PPI prints. The market expects 0.4% y/y for CPI (prior was 0.7%), while for PPI the consensus rests at -2.8% y/y (versus -2.7% prior). We also still await Mar new loans/aggregate finance data.
  • Goldman Sachs raised its China 2024 growth forecast to 5% from 4.5% in light of the recent PMI beats (BBG).