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USD/CNH Briefly Tests 7.10 As Yuan Plays Catch Up To USD Weakness On Mainland Stock Bid/Inflows

CNH

Broader USD weakness, sizable mainland equity inflows via the HK-China Stock Connect schemes (CNY13.6bn, the largest net daily round of inflows seen since July) and a mainland equity rally (the best day for the CSI 300 in over 5 months) provided some support for the yuan through early London trade.

  • See our daily China equity summary for more details on that front.
  • Recent comments in the wake of the quarterly PBoC monetary policy meeting failed to move the needle, with familiar soundbites/focal points evident (with a focus on a step up for existing policy measures).
  • USD/CNH showed as low as CNH7.1005 after starting Thursday trade around CNH7.1525. The broader USD has found a bit of a base since, leaving USD/CNH at CNH7.1075 at typing.
  • Immediate support is seen at CNH7.1000/7.0976 (with the later representing the Dec 15/multi-month low).
  • The move lower in USD/CNH came after the CNH underperformed on Wednesday, when USD/CNH was a touch firmer even as the BBDXY tumbled.
  • In terms of China-specific matters, the run of official and Caixin PMI prints present the data points of note over the coming days.
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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