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USD/CNH Continues To Gain Altitude, Chinese Trade Data Eyed

CHINA YUAN

Spot USD/CNH extended its initial gains in Monday's London hours, with the well-documented action from the PBoC taking centre stage. As a reminder, on Saturday China's central bank announced that it will remove risk reserve ratio requirement on FX forward transactions. The rate showed at its best levels since Oct 2 before easing off.

  • That being said, the news that Chinese Pres Xi will visit Shenzhen and deliver a speech on Wednesday re: plans of making southern China a global technology hub sparked some enthusiasm yesterday. Xinhua reported that the CPC wants to turn Shenzhen into a "socialist pilot zone with Chinese characteristics".
  • Press reports surrounding Sino-Australian tensions, mentioned in an earlier bullet, also gained some traction yesterday.
  • USD/CNH posted a leg higher alongside the DXY, as cash Tsy space re-opened after a long weekend in the U.S. The rate last sits +78 pips at CNH6.7527. Further gains past Oct 12 high of CNH6.7566 would allow bulls to set their sights on Sep 24 high of CNH6.8462. Bears need a retreat under Oct 9 low of CNH6.6787 to regain momentum.
  • The PBoC's daily fixing of the central USD/CNY mid-point will be closely watched today.
  • China's trade data hits the wires at some point later today, while inflation figures are due Thursday.
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