October 05, 2023 08:05 GMT
USD/CNH Continues To Coil During Mainland Holiday
USD/CNH sticks above CNH7.30 as the Chinese mainland holiday rolls on.
- The turn away from best levels in U.S. Tsys (with the curve now bear steepening on the day), coupled with equity and oil downticks, has allowed the BBDXY to move off session lows.
- USD/CNH moves back to ~CNH7.32 as a result.
- Chinese policymakers will be pleased with the relative lack of volatility in the cross since the holiday got underway.
- That leaves a familiar technical backdrop for USD/CNH in place.
- Local news flow saw Chinese property developer Sunac win court approval for its offshore debt restructuring plan, clearing what is seen as the final major hurdle re: the mater.
- This news, coupled with an early bid in the Hang Seng & USD weakness, will have supported the yuan in Asia-Pac hours (note the Hang Seng only sits 0.1% firmer on the day around the close).
- Elsewhere, we saw Citi raise their ’23 GDP growth forecast for China to 5% (prev. 4.7%). The bank believes that a recent round of what it deems to be promising data has added credence to the idea that the country will be able to achieve its official growth target this year.
- Immediate focus is on holiday-related economic performance, with local media outlets, ministries and some sell-side names pointing to positive early indications re: travel, as well as restaurant and retailer sales.