USD/CNH Lower On Broad USD Weakness, But Yuan Trails Safe Haven Gains

USD/CNH, aided by the sharp USD/JPY, fell towards 7.2600 (lows 7.2609) in late Asia Pac trade on Wednesday. However, we found some support and spent most of the US session back above the 7.2700, which is where we track in early Thursday trade.

• The CNH gained 0.23% for Wednesday's session, slightly lagging the 0.32% BBDXY dip (while the DXY fell 0.51%). Spot USD/CNY finished up at 7.2621, while the CFETS Yuan basket tracked was little changed (per BBG).
• CNH couldn't keep pace with yen gains, as risk aversion took hold of equity markets. CNH/JPY fell sub 21.50, lows back to the first half of June. Given the equity risk off move reflected a potential proposal by the Biden administration to further curb China access to chips, it isn't surprising the CNH lagged. In US trade, the Golden Dragon index was down 1.86%, with the index back tracking towards early July lows.
• Tariff concerns remain the other focus point, with Trump and his VP choice, JD Vance, seen strongly in favor of trade protectionism.
• BBG notes onshore supply/demand balance was better yesterday for CNY. CNH implied yields have edged away from recent highs.
• On the data front today we just have June SWIFT global payments in CNY.