USD/CNH Can't Sustain Downside Break Of 7.2700

Much of today's focus has been on China-related asset sentiment, with USD/CNH lower in early trade, but unable to sustain a break sub 7.2700, as equity momentum cooled. Most other pairs have seen relatively tight ranges and sit above session lows, in line with the USD/CNH rebound. THB and MYR have underperformed at the margins. Still to come is the Taiwan monitoring indicator, while tomorrow the regional data calendar is quiet.

• From earlier lows, USD/CNH has recovered back towards opening levels, last tracking close to 7.2890. This puts us only ~0.10% sub NY closing levels from Friday. Earlier lows were just under 7.2700, with the pair unable to break to fresh downside levels (as this level coincides with lows from last week). Equity sentiment looks more positive, albeit comfortably off earlier highs. The CSI 300 tracking around +1.75% firmer (we were above 5% not long after the open). To recap, China announced yesterday it would cut the stock trading levy to 0.05% from 0.1%. The first such cut since 2008. Not surprisingly, onshore brokerages have done well. Other market supports were announced in the form of limiting IPOs, while 17 new ETF products were approved at the end of last week.
• USD/TWD has tracked within recent ranges during today's session, the pair last around 31.835. Recent lows rest at ~31.74, while highs from mid August near 32.00 haven't been threatened. It's a similar backdrop for the 1 month NDF, which last sits close to 31.74.• Local equities are doing better today, but only at the margin (+0.25%), after last Friday's -1.72% correction, which also coincided with more than $1bn in offshore outflows. Coming up we have the July monitoring indicator, which is a composite measure of important variables for the economy, the index has been on the improve but from a low base.
• USD/IDR is relatively steady in early trade today, last at 15290, which is down slightly from Friday closing levels. Lows from last Thursday rest near 15240, while recent highs are around the 15360 level. The simple 200-day MA is back closer to 15207. BI plans to offer its new rupiah securities twice per week, Wednesday and Friday. These sales will start on September 15.
• The Ringgit is marginally pressured in early dealing, USD/MYR is up ~0.2% and remains well within recent ranges. Last week the pair consolidated recent gains in a narrow 4.64/66 range, there was little follow through on moves as broader USD trends dominated flows. August S&P Global Mfg PMI on Friday is the only data due this week as the data calendar is light.
• The Rupee is a touch firmer in early dealing this morning, broader USD trends are dominating flows however ranges remain narrow. USD/INR sits at 82.57/58 ~0.1% lower this morning. The pair fell ~0.5% last week, the largest weekly fall since early July. India, the world’s biggest exporter of rice, imposed more curbs on shipments of the grain in a move that’s likely to further squeeze global supplies. On Thursday Q2 GDP crosses an uptick to 7.8% Y/Y from 6.1% is expected. S&P Global Mfg PMI for August rounds off the docket on Friday.
• The SGD NEER (per Goldman Sachs estimates) is marginally softer in early dealing and has ticked away from its highest level since 3 Aug in recent dealing. The measure is ~0.5% below the top of the band. USD/SGD is a touch lower in early dealing, the pair is ~0.1% and last prints at $1.3550/55. The pair continues to consolidate in narrow ranges above the 20-Day EMA ($1.3511). There is a thin data calendar this week with just July M1 and M2 Money Supply due on Thursday.
• USD/THB is tracking higher in the first part of trade, last at ~35.24, down 0.40% in baht terms versus closing levels from the end of last week. Some of this reflects a resilient USD backdrop since Friday's onshore spot close. All of the key EMAs sit below current USD/THB spot levels, the nearest being the 20-day EMA at 35.01. Near term focus remains on political developments, with new PM Srettha stating the new cabinet is expected to be submitted today. Earlier reports suggested Pheu Thai would keep the key economic ministries, with Srettha potentially the Finance Minister.