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USD/CNH Back Towards Multi-Week High Post-U.S. CPI

CNH

USD/CNH remains in the upper end of the range witnessed since the latter part of November, last showing little changed on the day around CNH7.1920.

  • Fed repricing/reaction to U.S. supercore CPI allowed the rate to find a base a little above CNH7.1750.
  • Less lean from the PBoC mid-point fixing (vs. October and Nov levels), coupled with Chinese deflation worry and seemingly increased odds/speculation re: near-term policy support (although the post-CEWC readout didn’t contain any meaningful surprises) have helped underpin the rate in recent days.
  • A quick reminder that bears failed to push USD/CNH sustainably below the 200-DMA despite multiple breaches in late Nov/early Dec.
  • Yesterday’s high (CNH7.1994) presents the immediate upside target.
  • A quick reminder that the latest round of outflows from mainland equities via the HK-China Stock Connect links (~CNY5bn) provided some background pressure for the yuan today.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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