USD/CNH Back Sub 20-day EMA, Tighter Funding, Lower US Yields Help Trend

USD/CNH tracked mostly lower post the Asia close on Wednesday, we sit around 7.2440 currently, just above recent lows. CNH benefited from continued tight liquidity, while lower core yields amid an energy price pull back saw the BBDXY lose 0.35% in Wednesday trade. USD/CNY spot was relatively steady, finishing up around 7.2385.

• USD/CNH saw a brief pop higher late yesterday, as headlines crossed that US President Biden is calling for higher tariffs (25%) on some China steel and aluminum products. The move is seen as part of a series of steps to shore up the American steel sector and woo its workers in this year’s election. The US also launched a formal probe into China’s shipbuilding industry.
• However, there was no follow through in USD/CNH, with moves above 7.2550 drawing selling interest. The 20-day EMA sits around 7.2470, so we track just below this support point currently. The pair hasn't been able to sustain breaks below the 20-day EMA since late March. The 50-day sits further south close to 7.2300.
• 1 week implied yields for CNH hold near recent highs (5.3%), while the 1 month is just under 5%.
• US-CH yield differentials moved off recent highs, albeit at the margin. The local data calendar just has March Swift global payments on tap today, which is unlikely to move market sentiment.
• We saw a decent rise in onshore equities yesterday, amid supportive regulator comments. To recap, the CSI 300 rose 1.55%.