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CNH
USD/CNH has ticked lower, briefly showing below CNH7.22.
- A downtick in the broader USD on the back of moves in German & UK yields, coupled with the RTRS sources piece alluding to China's major state banks lowering their USD deposit rates for the second time in a month, facilitated the latest leg of the move.
- The daily USD/CNY mid-point fixing saw the biggest surprise of ’23 when it comes to CNY strengthening bias vs. BBG survey median (315 pips), providing support to CNH as policymaker angst remains evident.
- Elsewhere, Cailian pointed to a significant widening in the surplus of FX purchases vs. FX sales made by Chinese banks in the month of June, citing sources close to SAFE, “providing strong support for the basic balance between supply and demand in the FX market.”
- Continued rumblings surrounding yesterday’s protectionist efforts from China re: exports of rare metals critical to semiconductor production are seen ahead of the impending visits to China by high level U.S. & EU officials.
- The CSI 300 was little changed on the day, with small net sales of mainland equities observed via the HK Connect schemes.
- 5-Year swap rates added ~3bp, while 10-Year CGB yields were little changed.
Fig. 1: USD/CNH
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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