USD/CNH Back To 6.9700, But CNH Outperforms Stronger USD

USD/CNH tracked higher post the Asia close on Friday, breaching the 6.9700 handle, amid broad USD/US yield gains. We currently sit just above this level. The CNH lost 0.17% for Friday, compared with a +0.61% gain for the DXY. The CNY NEER rose as a result to 124.43 (J.P. Morgan Index), a gain of 0.14%. This left the NEER basically unchanged for last week.

• On the data front today we have the 1yr MLF rate outcome. No change is expected, with the current rate at 2.75% (only 1 forecaster out of 18 is looking for a 10bps cut). The MLF volume is projected at 100bn yuan (versus 170bn yuan prior).
• Still, the market focus is likely to remain on possible easier monetary policy conditions in the wake of last week's softer inflation/credit data. Note tomorrow we get the monthly run for Apr activity figures.
• Elsewhere the People's Daily stated the country will take a 'zero tolerance' approach around data security. This follows earlier raids on international consulting firm Capvision.
• This will create fears of further divergences in terms of China economic integration with other major economies, particularly the US.
• The Golden Dragon index fell 2.85% in Friday trade, finishing lower for the week. Onshore equities finished weaker last week, the CSI 300 losing 1.33% on Friday.