USD/CNH Down With US Front-End Yield Softness, But Remains Above Recent Lows

USD/CNH drifted lower post the Asia close on Tuesday, the pair getting back under 7.1200 by late US trade. We track just above this figure level in early Wednesday dealings. We were close to unchanged for Tuesday's session, slightly underperforming the softer USD index results. USD/CNY spot finished up at 7.1238.

• The CNY CFETS tracker was little changed at 97.61, holding close to recent lows.
• For USD/CNH, Tuesday highs printed at 7.1341, while Monday lows were at 7.1070 in terms of near levels to be mindful of. Note the 20-day EMA continues to trend down, last 7.1626.
• CNH sentiment was aided through US trade as US front end yields fell and Fed easing odds increased. Onshore China yields rose yesterday, supported at the margins by the increase in July profits data (although this didn't aid local equities). The 10yr ended near 2.16%, the 2yr at 1.525%, so still close to recent lows. US-CH rate differentials remain above August lows. The next local data focus point is this Saturday's official PMI prints for August.
• Local equity markets continue to struggle for meaningful upside, the CSI 300 closing yesterday near 3300.
• US National Security Advisor Jake Sullivan arrived in China yesterday and met with Foreign Minister Wang Yi in Beijing. A wide range of issues are expected to be discussed over the next few days.