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USD/CNH Close To 200-day MA Resistance, Weaker Credit Data To Fuel Easing Expectations

CNH

USD/CNH holds close to recent highs in early Monday dealings, the pair near 7.2340. We spent most of the Friday session tracking higher and sit near the 20 and 50-day EMAs. The simple 200-day MA is also around 7.2380. On the downside, the 100-day EMA is near 7.2250. Spot USD/CNY finished up at 7.2268.

  • Broader USD sentiment was mildly firmer on Friday as US yields rose, amid firmer inflation expectations.
  • We had data over the weekend on April inflation and credit/new loans data in China. Inflation was close to expectations (headline CPI +0.3% y/y, versus 0.2% forecast). See this link. Credit expansion was weaker than expected, with M2 slowing to a record low, see this link.
  • This is likely to keep expectations around further policy support still firm from a sell-side standpoint. The FT reported that China has kicked off plans to sell longer dated bonds ($140bn) to support the economy.
  • Note on Wednesday the 1yr MLF outcome is due, although no change is expected at this stage (currently 2.5%).
  • The other focus point will be an expected tariff hike by the US Administration on certain China exports, including EVs. An announcement is expected this week (see this BBG link).
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