USD/CNH Drifts Lower, Focus On Onshore Spot Near Daily Trading Limit

USD/CNH drifted lower post the Asia close on Monday. The pair getting to the low 7.2400 region by late in NY trade. Earlier Monday highs came in close to 7.2550. Spot USD/CNY finished up near 7.2300 for Monday's session. Earlier highs were around the 7.2340 region, which reportedly drew state bank USD selling flows (per Bloomberg). The upside ceiling on USD/CNY yesterday (+2% above the 7.0947 fixing level) was around 7.2366.

• The USD/CNY fixing has held very close to the 7.0950 level in recent weeks, which naturally caps upside in spot USD/CNY. This will remain a focus point for markets in the near term and likely cap upside USD/CNH to a degree.
• Liquidity was also tighter in the offshore market, albeit with CNH T/N remaining sub late March highs. This is another sign resistance to CNH weakness though.
• Still pressures in the US-CH rate differential space point to upside USD/CNH risks, with US yields making fresh multi month highs in Monday US trade. We do have US CPI and the FOMC Mins coming up on Wed & Thurs respectively though.
• Locally, the data calendar is quiet, although Mar new loans/aggregate finance figures are due between today to the 15th of April. On Thursday Mar CPI and PPI prints are due.
• Elsewhere US Treasury Secretary Yellen wrapped up her 4-day trip to China by stating China banks would be sanctioned if they supported Russia's war efforts (see this BBG link).