USD/CNH Lower, But Yuan Underperforms Broader USD Weakness

USD/CNH tracks near Thursday session lows in the first part of trade today, last near 7.2000. CNH was +0.13% firmer yesterday, against a BBDXY dip of 0.44%, so still underperforming broader USD weakness. The onshore USD/CNY rate finished at 7.1926. The CNY NEER (J.P. Morgan) was down a further 0.19% to 123.87. This is lows in the index back to early Feb.

• The data calendar is empty today but note we get Feb inflation data tomorrow. The CPI is expected to rise to 0.3%y/y from -0.8% in Jan. The PPI is expected to be unchanged in y/y terms at -2.5%. The headline CPI may be aided by higher food/restaurant services prices in the month, given the timing of LNY. Similar trends have been evident in South Korea and Taiwan Feb CPI prints.
• Late yesterday we had FX reserves data tick higher for Feb to $3225.8bn (against a $3217.0bn forecast). The rise came despite ongoing concerns around capital outflow pressures. Reserve holdings of gold continued to rise.
• In the equity space, the Golden Dragon index fell 0.86% in US trade. This followed weakness in HK and onshore China stock indices. Northbound stock connect flows were negative yesterday, running negative for the week, with only Tuesday the positive inflow day.
• For USD/CNH, we are sub all key EMAs, except the 200-day (around 7.1770). The simple 50-day MA is close by to current spot levels, 7.1970. This was a support point back on Feb 21.