USD/CNH Consolidates Post 7.3000 Break

CNH rose 0.85% for Monday's session, although all of the gains were recorded in Asia Pac trade, with the pair consolidating in London/NY trade. From lows of 7.2920 we rebounded back towards 7.3200, before pulling back to 7.3000 by the NY close on Monday. We track near 7.3040 currently. USD/CNY spot ended Monday's session just under 7.2900 (up from lows near 7.2700). The CNY NEER (J.P. Morgan Index) rose 0.34% to 122.31.

• The local data calendar is quiet until Friday when we get the 1yr-MLF rate (no change expected at 2.50%), along with August activity figures.
• The market may want to see signs of improved growth momentum before turning more constructive on the yuan outlook. Yesterday's August credit data was better than expected, which may paint some upside risks to Friday's data according to some sell-side analysts.
• Verbal jaw boning from the PBoC and yesterday's record stronger than expected CNY fixing were also positives.
• The 1 month risk reversal for USD/CNH was relatively steady, sitting close to +0.11 in recent dealings. 1 month implied vol is higher at 5.74%, but remains below mid-August highs of ~7.00%.
• The Golden Dragon index rose 1.15% in Monday US trade, amid broader positive equity sentiment. To recap, the CSI 300 was +0.74% firmer in Monday's session.