USD/CNH Faded Above 7.2000, But Yuan Underperforms Softer USD Trend

USD/CNH finished marginally higher for Wednesday's session, ending at 7.1935. (loss of 0.09% for CNH). We track near these levels in early Asia Pac Thursday trade. These levels are off intra-session highs from yesterday around 7.2025. USD/CNY onshore spot finished up at 7.1868, while the CNY NEER (J.P. Morgan index) fell 0.19% to 123.73, as the yuan underperformed softer USD trends elsewhere.

• BBG notes that dollar demand was evident onshore yesterday, but state owned banks were leaning against such pressures (Wednesday highs in USD/CNY were at7.1951).
• The continued push higher in US yields through Wednesday trade likely weighed on CNH at the margins, with other low yielders like JPY and CHF also underperforming. US-CH yield differentials have firmed, but current CNH levels don't look greatly misaligned. Onshore media was highlighting analyst calls yesterday for further RRR and MLF cuts in Q2.
• We do have the 1yr MLF outcome tomorrow, but no change is expected (current rate at 2.50%).
• In the equity space, onshore markets finished lower yesterday (CSI 300 down 0.70%), with weaker property sentiment weighing. The Golden Dragon index rose 1.04% in US trade.
• The US House passed a bill that will ban TikTok in the US unless its China parent company (ByteDance) sells the video-app. It is unclear though if the US Senate will pass the legislation.