USD/CNH Back Sub 50-Day EMA, US-CH Yield Differentials Lower, June Trade Data Out Today

USD/CNH tracks near 7.2675 in early Friday dealings. CNH gained 0.34% for Thursday's session, aided by the sharp pull back in US yields (post the weaker US CPI print), coupled with the sharp yen rally (on suspected intervention). USD/CNY finished up just under 7.2580 for Thursday's session.

• USD/CNH lows were at 7.2580 in Thursday trade, which was sub both the 20 and 50-day EMAs. The 50-day EMA is close to 7.2710, so not too far from current spot levels. The 100-day EMA comes in around 7.2540 in terms of a further support point to watch.
• US-CH yield differentials are tracking lower, albeit from elevated levels. More signs of a turn in Fed monetary policy should bias such spreads lower all else equal. The 2yr government bond yield spread is back to +288bps, the 10yr at +195bps. USD/CNH maintains a reasonable correlation with such trends.
• The USD/CNY fixing should come in lower today, given a lower USD/CNY 4:30pm close yesterday and broader USD index softness.
• On the data front we have June trade figures. Exports are likely to remain firm (projected at 8.0% y/y from 7.6% prior per the BBG consensus survey). Imports are forecast at 2.5%y/y (from 1.8% prior).
• In the cross asset space the CSI 300 equity finished higher by 1.14% yesterday, aided in part by regulatory shifts. Local bond yields mostly edged down. US-CH yield spreads will remain more driven by US developments though.