USD/CNH Back Above 7.2400, As Early Re-Opening Hopes Quashed

USD/CNH has rebounded in early trade this morning, the pair is back above the 7.2400 level, +0.80% above NY closing levels. This comes after Friday's sharp dip in the pair, -2% and back to a 7.1800 handle.

• Market speculation about an imminent shift in China's covid-zero policy drove a strong rally in China related assets late last week. These hopes were dashed though given the weekend news conference from the China health authorities, which stated a continued commitment to Covid-zero policies.
• Some sell-side analysts don't expect a full re-opening until the latter stages of Q1/early Q2 next year, which is clear of the winter period and allows greater vaccination take-up for the elderly part of the population.
• Still, this is likely to remain a focus point for market sentiment in the near term and any fine-tuning in Covid-related policies will be followed closely.
• Elsewhere, for today's data calendar, we have FX reserves for October ($3039bn expected, versus 3028.9bn last month). Trade figures are also due. Export and import growth are expected to ease further (4.5% y/y & 0.0% y/y are the forecasts respectively). The trade surplus is forecast to rise to $95.97bn.