USD/CNH Forces Another YtD High

USD/CNH looks above CNH7.1300 on the latest round of USD strength, with the already released run of CPI data out of the Eurozone adding to the Asia-Pac bid that stemmed from a softer than expected round of official PMI data (click for more colour on the latter).

• Data-related weakness in Chinese equities (with the CSI 300 -1% on the day) was aided by net outflows via the Hong Kong Stock Connect channels, which totalled CNY3.8bn, adding a further source of pressure for the yuan.
• There was already plenty of speculation re: the need for policy stimulus (including rate cuts) evident pre-data.
• The PBoC provided little steer when it came to the official USD/CNY mid-point fixing (once again).
• Some sell-side desks have outlined the softening China theme as the one that is generating the most interest/action when it comes to executed business. On that front we have previously outlined an uptick in USD/Yuan upside options activity since around the time of the break of 7.00.
• CNH7.1500 and trend channel resistance (CNH7.1533) present the next levels of meaningful technical resistance after another fresh YtD high was registered in the cross.