USD/CNH Off Session Highs, But Underperforming Continued USD Weakness

USD/CNH sits above session lows. We were last at 7.1720/30 (earlier high was 7.1802). This was below pre US CPI levels from Wednesday, which came in closer to 7.2000. Lows today in the pair came in at 7.1603, which we touched prior to the fixing outcome. USD/CNY spot has also recovered some ground, last around 7.1700, albeit off session highs.

• The fixing outcome was still on the strong side, but less firm compared with the first part of July. This is has likely tempered CNH bullishness at the margins. The G10 complex is higher against the USD, so CNH is underperforming this trend.
• We are still waiting for June trade details, with only aggregate H1 details only released so far. The authorities stating that exports showed strong resilience in the first half but weakening external demand will still impact trade going forward.
• Local equity sentiment is strong, the CSI 300 rebounding over 1% at this stage. The HSI is up 2.50%. Onshore media highlighting efforts to stimulate the private sector are aiding sentiment in this space.