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USD/CNH Dips Supported, Eyes On USD/CNY Fixing, Equity Weakness Continues

CNH

USD/CNH dips remain supported through Tuesday trade. By the US session we probed above 7.2900 and sit just sub this figure level in early Wednesday dealings. Broader USD sentiment was mostly positive, with none of the G10 currencies rising against the dollar. USD/CNY spot was also supported on dips, finishing Tuesday trade near 7.2630, just under the upper daily trading limit.

  • For USD/CNH recent highs rest near 7.2950, while the 20-day EMA is around 7.2710 on the downside.
  • Focus today will rest on the CNY fixing, with yesterday's firmer than expected result (in USD/CNY terms) helping keep USD/CNH dips supported. Liquidity is also getting tighter, working to curb the pace of depreciation pressures. CNH implied yields have ticked higher, albeit from depressed levels, the 1 month last near 2.74%.
  • The local data calendar remains empty until tomorrow's industrial profits release.
  • Equity underperformance remains a theme, the CSI 300 down a further 0.54% yesterday. The ratio of China to world equities remains skewed to the downside.
  • Comments from Premier Li Qianq didn't suggest strong fresh stimulus measures would be forthcoming, but the Premier expressed confidence in reaching this year's growth target.

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