USD/CNH Holding Tight Ranges

USD/CNH has held relatively steady, maintaining a narrow range during Wednesday trade to date. The pair was last near 7.2910, slightly above NY closing levels from Tuesday. Earlier lows in the pair were closer to 7.2800, leaving us well within recent ranges.

• Other USD/Asia pairs are mostly lower, although the majors are mixed against the USD, so this may be providing some offset. The generally firmer equity backdrop isn't aiding sentiment today, although mainland equities are only a touch above recent lows.
• More broadly, the yuan outperformed on the recent run higher in the USD. The J.P. Morgan NEER rose 4.3% from mid July lows to early October highs. Hence as dollar sentiment has softened, the China currency may be showing less sensitivity compared to other currencies in the region.
• The latest insights from the MNI policy team suggests headwinds around the China economic backdrop, coupled with limited fiscal, monetary policy room (see this link). Such concerns may be constraining offshore appetite for the yuan, even in light of recent sell-side growth upgrades.