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CNH
USD/CNH pulled back from best levels (CNH7.2491) alongside the broader USD, owing to USD-negative moves in yield differentials vs. G10 FX, finding support around CNH7.2400 before an uptick leaves the cross dealing around CNH7.2470.
- Bulls continue to lean on the breached upper boundary of the well-defined uptrend channel that was in play earlier this year for technical support on dips.
- CPI data provided the latest round of economic worry re: China, printing at 0.0% Y/Y in June, signalling tepid domestic demand and generating sell-side calls re: imminent deflation.
- This has solidified calls for further easing, although the risk on that front seems to be tilted towards under, not over, delivery, via targeted support.
- The daily USD/CNY mid-point fix from the PBoC continued to lean towards CNY strength, although the ~196 pip differential vs. the BG consensus represents a moderation from last week’s YtD extremes, which were themselves well shy of the ’22 wides.
- A fade in the early bid for Chinese equities, alongside a post-CPI move lower in 5-Year IRS rates & 10-Year CGB yields, would have fed into the downtick in CNH.
- Money supply and trade balance data fill out this week’s domestic tier 1 economic docket.
Fig. 1 USD/CNH
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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