USD/CNH Holding Above 7.2900 Amid Low Vol, CNY Basket Edging Lower

USD/CNH tracked sideways through Wednesday trade, maintaining tight ranges. Dips sub 7.2900 were supported, but we couldn't test beyond 7.2940. Low vol may persist into next week's 3rd Plenum meeting, as a surge in yuan volatility is likely to be an unwelcome distraction for policy makers. USD/CNY spot finished up at 7.2760, 9pips short of the upper daily trading limit. The CFETS CNY NEER tracker (per BBG) continued to edge lower. CNH underperformed GBP and EUR gains.

• For USD/CNH we remain above the 20-day EMA (near 7.2875), while recent highs were marked at 7.3114 from July 3. For today's USD/CNY fixing, USD index levels were lower for Wednesday trade, although USD/CNY onshore spot continued to climb.
• To recap, yesterday's inflation data still suggested a fairly benign domestic backdrop, which leaves sell-side views still seeing policy support (even as the PBoC looks to address lower longer dated yields).
• The data calendar is empty until tomorrow's trade figures are released, although we still await June new loans/aggregate finance data.
• In the equity space, the CSI 300 fell just over 0.3% yesterday, but remains above 3400. Onshore CGB yields ended down a touch.
• The US administration will apply tariffs on steel imports from Mexico in a bid to prevent a surge in such products originating from China (see this BBG link for more details).