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USD/CNH Below CNH7.1250

CNH

As mentioned elsewhere, the rally in U.S. equities helps pressure the USD further, allowing USD/CNH to move to fresh session lows below CNH7.1250.

  • A quick reminder that Tuesday saw Chinese state-backed media run comments from ‘market insiders’ suggesting that the yuan will likely further strengthen against the USD, breaking below 7.00 in ’24. They pointed to Fed rate cut exp. as a key driver.
  • CNH TN continues to operate around the 0 mark, indicating relatively tight funding conditions.
  • Continued worry re: the property sector was noted during Tuesday’s mainland equity trade, with light net outflows from mainland equities seen via the HK-China Stock Connect links. These matters provided some headwinds for the yuan in Asia hours, before broader USD weakness kicked in.
  • Familiar technical parameters remain in play for USD/CNH, with the Dec 15 low (CNH7.0976) providing the key target for CNH bulls.
  • The latest round of LPR fixings is due in Wednesday’s Asia-Pac session, no movement is expected there (based on BBG survey medians and the lack of movement in the prevailing interest rate at last week’s MLF operations).
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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