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USD/CNH Lower, Back Close To 20-EMA Support Level

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USD/CNH fell in Thursday trade by 0.24%, CNH's first meaningful rise since Wednesday last week. We sit near 7.2550 in early Friday trade. The pair isn't too far away from the 20-day EMA, which comes in near 7.2525, although dips sub this level have supported through April. Onshore USD/CNY spot also finished lower, back around 7.2400, after the pair got very close to the top end of the trading band in earlier Thursday trade (around 7.2479).

  • Broader USD softness against most of the majors likely aided CNH at the margins. Implied forward yields remain well off recent highs for CNH, the 1 week last near 1.70%, the 1 month just above 3.60%. CNH deposit rates in Hong Kong also continue to slide.
  • The equity backdrop is lending some support to the yuan, albeit at the margins. The Golden Dragon index in the US has risen every session so far this week, with some investors potentially seeing value in this tech space relative to stretched levels elsewhere. Still, the CSI 300 is largely tracking sideways closing yesterday at 3530, up modestly.
  • Debate also continues if the CNY will devalue or not. Recent official commentary leans more towards a gradual depreciation and riding out this wave of USD strength, rather than a sharp one-off move.
  • The local data calendar remains empty until tomorrow's Mar profits print.
  • US Secretary of State Blinken continues his China trip today, with trade practices reportedly raised in discussions yesterday.
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USD/CNH fell in Thursday trade by 0.24%, CNH's first meaningful rise since Wednesday last week. We sit near 7.2550 in early Friday trade. The pair isn't too far away from the 20-day EMA, which comes in near 7.2525, although dips sub this level have supported through April. Onshore USD/CNY spot also finished lower, back around 7.2400, after the pair got very close to the top end of the trading band in earlier Thursday trade (around 7.2479).

  • Broader USD softness against most of the majors likely aided CNH at the margins. Implied forward yields remain well off recent highs for CNH, the 1 week last near 1.70%, the 1 month just above 3.60%. CNH deposit rates in Hong Kong also continue to slide.
  • The equity backdrop is lending some support to the yuan, albeit at the margins. The Golden Dragon index in the US has risen every session so far this week, with some investors potentially seeing value in this tech space relative to stretched levels elsewhere. Still, the CSI 300 is largely tracking sideways closing yesterday at 3530, up modestly.
  • Debate also continues if the CNY will devalue or not. Recent official commentary leans more towards a gradual depreciation and riding out this wave of USD strength, rather than a sharp one-off move.
  • The local data calendar remains empty until tomorrow's Mar profits print.
  • US Secretary of State Blinken continues his China trip today, with trade practices reportedly raised in discussions yesterday.