USD/CNH Back Sub 7.2800 On Broader USD Softness, LPRs Seen On Hold Today

USD/CNH is tracking lower in early Asia Pac dealings. The pair was last near 7.2785, against earlier highs just above 7.2860. CNH is up around 0.10% versus end NY levels from last week, in line with softer USD trends against the majors (BBDXY USD index down a little over 0.20%). The main sentiment driver at this stage has been US President Biden dropping out of the Presidential race and endorsing VP Kamala Harris. Spot USD/CNY finished up on Friday just under 7.2700.

• Republican election odds have slipped with Biden now out of the race, which has weighed on USD sentiment, as some heat comes out of the Trump reflation trade. US equity futures are higher, while backend US Tsy futures have ticked up a touch as well. However, overall moves are modest and Trump is still seen as the clear favorite.
• CNH is benefiting from such trends, although its overall beta to USD moves remains quite low. The pair is back near the 50-day EMA (7.2725/30), but recent breaks sub this level have proven to be buying opportunities.
• Turning to local focus points, the market will digest the Plenum outcomes, which focused on reforming the fiscal backdrop to improve the finances of heavily indebted local governments. More details around policy stimulus could be forthcoming at the Politburo meeting at the end of this month.
• On the data front today we have the 5yr and 1yr LPRs, which are seen being held steady at 3.95% and 3.45% respectively.