USD/CNH Back Above 7.1300

USD tailwinds have allowed USD/CNH to show back above CNH7.1300, with bulls eying YtD highs (CNH7.1398) after Friday’s brief turnaround for the yuan threatened, but ultimately failed, to breach the run of consecutive weekly moves higher in the cross (which now stands at 4 weeks).

• A breach of the YtD peak and CNH7.1500 would open the way to CNH7.1606, the top of a bull channel drawn from the Feb 2 high.
• Offshore investors reverted to net selling of mainland shares via the Stock Connect schemes on Monday (albeit for a limited CNY1.21bn) after lodging the most sizable round of net purchases seen since February ahead of the weekend, while the CSI 300 ticked lower.
• Yicai Global ran a piece noting that “overseas investors’ enthusiasm for the Chinese stock markets is growing, as the country’s economy continues to go from strength to strength and as regulators make it easier for companies to go public.”
• While YtD net equity flows are positive, questions surrounding the strength and breadth of the Chinese economic rebound have magnified, resulting in a clear switch to a trend of net selling via the Stock Connect Channels in recent weeks.