USD/CNH Holding Above 7.2100, Despite US Yield Pull Back

USD/CNH maintained recent ranges post the Asia close on Tuesday, as the market digested details from the NPC, which didn't deliver huge surprises relative to expectations. We couldn't get beyond the 7.2140 level, while dips sub 7.2100 were supported, hence we maintained tight ranges overall. We track near 7.2120 in early Wednesday dealings. For USD/CNY onshore spot we closed at 7.1965. The CNY NEER (J.P. Morgan Index) was steady at 124.34.

• CNH didn't receive much support from the pull back in US yields through US data, amid softer data, particularly in terms of the ISM Services details. US-CH yield differentials sit off recent highs, but USD/CNH didn't track higher during the recent move higher in these spreads, so short term correlations may be lower.
• China yields ended lower, albeit for the longer dated 30yr, where ultra long bond issuance, announced in yesterday's NPC was a potential factor. Fiscal policy is seen as a key plank to deliver stimulus and help China achieve its growth target of around 5% this year. See more from the MNI policy team here on the fiscal stance.
• In the equity space, we saw the Golden Dragon index fall 1.49% in Tuesday US trade. Onshore markets rose yesterday, although there were suggestions that state support was in play.
• The local data is empty today, with Feb trade figures out tomorrow.