USD/CNH Off Fresh YtD Highs, Little Pushback From Officials Re: Yuan Weakness

USD/CNH broke through CNH7.1500 in NY hours as the USD strengthened and also managed to show above the figure in Asia-Pac hours, with another fresh YtD high of CNH7.1557 registered.

• CNH has managed to regain some poise since then and last sits at CNH7.1415. Bulls remain in control, even though the cross remains technically overbought, with initial resistance now coming in at the top of the trend channel (CNH7.1679).
• Musings from SAFE indicated that the Chinese authorities are willing to ride out the wave of USD strength, while there is still a distinct lack of leaning against the wind in the daily USD/CNY mid-point fixing. Meanwhile a PBoC Deputy Governor pointed to the Bank’s capabilities re: maintaining a stable FX market.
• Mainland equities more than pared early losses as property names (on continued easing hopes) and banks (as the widely touted deposit rate cuts were delivered) rallied. Regulators reaffirmed prior messaging on the opening up of markets, which some suggested was equity supportive.
• Northbound Stock Connect flows were supportive for the yuan, with a second day of modest net inflows registered (CNY2.95bn).
• Speculation re: the potential for an LPR cut continues to do the rounds in state-run media outlets.
• 5-Year IRS and 10-Year government bond yields were little changed on the day.