USD/CNH Holding Above 7.2600, Caixin Manufacturing PMI Out Today

USD/CNH was mostly on the front foot post the Asia close on Friday. The pair getting to 7.2680/85 by the NY session. We track near 7.2635 in early Monday dealings, after CNH lost 0.13% on Friday, underperforming the generally softer USD trends seen against the majors. USD/JPY was supported though, and holds above 157.00. USD/CNY spot finished up at 7.2417 on Friday.

• Softer US yields didn't produce any lasting positive impact for CNH through Friday US trade. USD/CNH technicals are unchanged from late May. Recent highs rest at 7.2758 (May 29), while the 20-day EMA sits back near 7.2500 on the downside and has been a support point.
• Elsewhere, China cross asset signals were, on balance, a yuan headwind on Friday. Local government bond yields were mixed, with the 2yr to 1.77%, fresh cycle lows back to 2020. The 10yr firmed a touch though to 2.32%, amid fresh warnings from the PBoC around low yields (an onshore paper backed by the central bank stated 10yr yields should be 2.5-3.0%).
• Local equities finished down on Friday, the CSI 300 off 0.40%. In US trade on Friday the Golden Dragon index fell 1.56%. Onshore China ETFs saw an outflow in May for the first time since Feb 2023 (see this BBG link).
• On the data front today we have the Caixin manufacturing PMI. The market expects a 51.6 outcome, versus 51.4 prior. This follows Friday's disappointing official PMI prints, with manufacturing falling back into contractionary territory.