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USD/CNH Back Sub 200-day MA, Friday Inflation Data Key Focus Point

CNH

USD/CNH dipped close to 7.1400 post the US payrolls print on Friday. This was well off earlier highs near around 7.1800. We recovered though to finish around 7.1630 and we track slightly higher in early Monday dealings, last near 7.1660. USD/CNY spot finished up at 7.1471 on Friday, while the CNY NEER (J.P. Morgan Index) nudged up by 0.11% to 123.29.

  • USD/CNH is back below its simple 200-day MA (near 7.1715). As we noted late last week we expect to firmer resistance on any move in USD/CNH towards 7.2000. Rtrs sources flagged state bank support for the yuan late last week, see this link.
  • Broader yield differential trends with the US still look supportive for USD/CNH upside though, particularly in terms of the 10yr spread. This is spread is nearly 20bps above late 2023 lows, albeit was volatile through Friday's US NFP release.
  • Easing speculation is likely to be a focus point for China markets this week. We have Dec inflation data on Friday, with headline CPI and PPI expected to remain negative. Note as well, the release window for Dec aggregate finance/new loans is Jan 9th to the 15th.
  • Dec trade data is also due this Friday.

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