USD/CNH Near 7.2900, June Inflation Data Out Today

USD/CNH tracks near 7.2890 in early Wednesday dealings, the pair having recorded a less than 100pip range in Tuesday trade. Current levels are just above the 20-day as the pair consolidates somewhat after moving sub 7.3000 in early July. The 50-day EMA remains close to 7.2700 on the downside. USD/CNY spot finished up at 7.2726, which was close to the upper daily trading limit of 7.2736 (+2% above the daily fixing level).

• As we noted yesterday, the USD/CNY fixing provided support for yuan bears, as it printed just under recent highs, despite the recent pull back in broader USD indices. Focus today will be on whether we breach the 7.1312 level, which has marked recent highs.
• The other focus point today is the June inflation figures. The market expects headline CPI at 0.4% y/y (prior was 0.3%). For the PPI, the consensus rests at -0.8%y/y, versus -1.4% prior. Inflation trends outside of the food sector will be eyed to gauge the health of domestic demand.
• In the cross asset space, local equities were higher in Tuesday trade, the CSI 300 bouncing +1.12%. This index seeing some support emerge on dips sub 3400.
• In the rates space, yields were lower for CGB benchmarks. The 10yr yield back under 2.28%, the 2yr off 4bps (which reversed Monday's gain in yield terms).