USD/CNH Close To 7.3000, As Yesterday's rate Cuts Keep Yuan Bears Engaged

USD/CNH tracks near 7.2960 in early Tuesday dealings. This is just off late US session highs in Monday trade (7.2972), with yesterday's rate cuts weighing on yuan sentiment. CNH lost 0.15% for the session, underperforming slight dips in broad USD indices (BBDXY off nearly 0.10%). USD/CNY spot ended Monday's session just under 7.2740, not too far from the upper daily trading limit of 7.2762.

• For USD/CNH, upside focus is likely to rest on early July highs, just above 7.3110. Note on the downside the 20-day EMA is near 7.2840.
• Despite underperforming the USD indices, the CFTES CNY basket tracker finished a touch higher on Monday, albeit up only slightly from recent lows (near 99.24 per BBG). Some commodity currencies were weighed by softer prices, particularly in the metals space.
• US-CH yield differentials ticked higher, with support coming from China's reverse repo and loan prime rate cuts yesterday. CGB yields were lower at the front end, the 2yr making a fresh cycle low of 1.58% (-3.5bps), the 10yr off nearly 2bps to 2.24%. Yields spreads with the US remain off recent highs though (2yr +294bps, the 10yr spread at +201bps).
• Equity sentiment was weaker onshore, the CSI 300 finishing down 0.68% yesterday, with the rate cuts failing to lift broader sentiment. China equities to the global ratio is relatively steady though.
• The data calendar is relatively empty this week. Industrial profits for June print this Saturday.