USD/CNH Failing To Breach YtD Extreme Thus Far

USD/CNH looks through the broader airing of a piece in China’s Global Times which sees analysts suggesting that “the yuan has remained largely stable despite short-term downward pressure, while positive factors including China's economic rebound and a possible end to U.S. interest rate hikes may boost the yuan to about 6.8 per dollar by the end of 2023” (click for full story)

• The pair is more concerned with the broader uptick in the DXY as the BBDXY recovers from session cheaps, alongside the previously outlined stories which have pointed to guidance for deposit rate cuts at the big Chinese banks.
• USD/CNH hasn’t quite managed to challenge YtD highs of CNH7.1398, registering a high of CNH7.1375 thus far. A break above current ’23 extremes, would expose CNH7.1500. Beyond that round level resistance number, trend channel resistance is seen at CNH7.1630 today.
• Worries surrounding the potential deposit rate tweak at major banks leaves the yuan open to potential depreciation pressure via interest rate differentials (all else equal), while the caution surrounding the strength and breadth of the Chinese economic rebound in lieu of the recent run of soft economic data is well-documented.
• Also note that the PBoC hasn’t provided any meaningful lean against yuan weakness via its mid-point fixing in recent times.