USD/CNH Back To 7.30, Mainland Equity Outflows Persist

USD/CNH ticks up towards CNH7.30 as the BBDXY moves to best levels of the day.

• Familiar technical parameters remain in play, with a lack of decisiveness in recent sessions resulting in sideways trade for USD/CNH, a little shy of YtD highs.
• The recent run of Chinese data and well-defined economic headwinds has seen the median of the BBG survey of economists pointing to Chinese GDP growth of 5.1% in 2023, down from the prior 5.2%, loosely in line with the government’s target of “around 5%.”
• The survey also pointed to another 10bp MLF rate cut in Q423.
• A major local news outlet ran a commentary piece which saw analysts point to the potential for a RRR cut in Q423, while the aforementioned BBG survey looks for such a move in the current quarter.
• Capital outflows from the country’s equity markets have provided continued headwinds for the yuan in recent sessions, with 16 of 17 days generating net outflows via the HK-China Stock Connect links.
• Official PMI data, due Thursday, presents the next major round of domestic data for market participants to digest.