USD/CNH Makes Fresh Highs, CNY NEER Still Tracking Lower

USD/CNH got to fresh highs around 7.1535 during the Wednesday NY session, before pulling slightly lower into the close. We last tracked in the 7.1460/70 region, with the CNH losing 0.26% for Wednesday's session. Dips sub 7.1200 were supported. USD/CNY closed at 7.1350, while the CNY NEER (J.P. Morgan index) edged down slightly further to 122.42.

• The big four state owned banks reportedly cut USD deposit rates onshore, in a move designed to reduce the appeal of holding foreign currency (as opposed to the yuan), see this link for more details.
• Some carry over from the weaker export growth picture yesterday likely weighed as well post the Asia Pac close. The US-CH 2yr spread also continues to trend higher, post the US yield surge in NY trade. Onshore China government bond yields were relatively steady yesterday.
• The local data calendar is empty today, but we do get May inflation figures tomorrow.
• The Golden Dragon index lost close to 1% in US trade on Wednesday. This followed the CSI 300 off by 0.49% in Wednesday's onshore session. The Shanghai Composite was close to flat though.