USD/CNH Back Above 7.1700, Moody's Shift & Equity Weakness Weigh

MNI (Australia) USD/CNH spiked late yesterday towards 7.1600 on headlines that Moody's had changed China's credit rating outlook to negative. BBG reported that state banks were heavy USD sellers during this period. USD/CNH settled lower, but dips sub 7.1500 were supported. We got back to 7.1760 by late NY trade, tracking near 7.1700 in early Wednesday trade.

• The CNH fell 0.34% for the session, as broader USD indices continued to recovery (BBDXY +0.23%), with EUR weighed by dovish ECB speak.
• USD/CNY finished up at 7.1472, so it may see some early catch up today when onshore markets re-open. The CNY NEER (J.P. Morgan index) finished up 0.11% to 124.31.
• In terms of the Moody's announcement, it focused on familiar sources of worry in the press release, namely the support required for local governments and SOEs, along with headwinds for the property sector. As a result, the agency cautioned on “increased risks related to structurally and persistently lower medium-term economic growth.”
• China equities remain weaker. To recap, the CSI 300 closing down 1.9% to fresh lows sub 3400. Familiar drivers were in play around the economic outlook/earnings weakness. in US Tuesday trade, the Golden Dragon index lost just over 1.5%.
• The local data calendar is empty today, with trade figures for Nov due tomorrow.