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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.
CNH
USD/CNH maintained an offered tone post the Asia close on Tuesday. We got to a low around 7.1260, before rebounding somewhat in NY trade, getting back above 7.1400. We currently track around 7.1370. CNH gained 0.68% for Tuesday's session, outperforming broader USD trends. USD/CNY finished at 7.1363, while the CNY NEER (J.P. Morgan index) surged 0.75% to 121.38. This index is now around ~2% above recent lows.
- For USD/CNH, we are now sub the 50-day EMA (7.1455), while Tuesday lows weren't too far off July 14 lows near 7.1230. A break below this level could see mid June lows near 7.1040 targeted. Note the 100-day EMA is back near 7.0770.
- State banks also reportedly continued to sell USDs into the onshore 4:30pm official spot close (coming in at 7.1365). This is an input into the CNY fix.
- The focus is now likely to be on how long China asset market performance is sustained for. The chart below plots USD/CNH (inverted on the chart) against the China to world equity ratio. The CSI 300 finished close to +3% higher on Tuesday, although the Golden Dragon index posted a more modest +0.34% gain (after Monday's+4.27% surge).
- Northbound stock connect flows surged to nearly 19bn yuan for Tuesday's session, the strongest daily inflow since December 2021.
- Pan Gongsheng was confirmed as new head of the PBoC, replacing YI Gang, who reached retirement age at 65.
- The local data calendar remains empty today.
Fig 1: USD/CNH (Inverted) Versus China To World Equity Ratio
Source: MNI - Market News/Bloomberg
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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