USD/CNH Pinned Around CNH7.30

USD/CNH remains pinned around CNH7.30 during London & early NY trade.

• Capital flow stories/speculation was a major supportive factor for Chinese equities Friday, which provided some support for the yuan.
• Also, Chinese mainland equities saw the largest round of net daily inflows since late July via the HK-China Stock Connect schemes, which would been another supportive factor.
• More recently, the flagged stories re: an improvement in Sino-U.S. relations and press speculation re: the relaunch of special refinancing bonds before year-end (CNY1tn quota touted, which would tilt towards 12 high-risk provinces) have provided some background support for the CNH, albeit not forceful
• That leaves the Asia/early lows intact.
• CNH forward points are generally a touch higher on the day, but sit off recent extremes, with the same holding true for CNH HIBOR fixings out to 6 months, while 12-month HIBOR tagged a fresh cycle high.
• Policymaker defence of CNY7.30 in the onshore market remains evident, with another all-time wide in the mid-point fixing vs. BBG sell-side survey estimate spread. Fundamentally, policy makers continue to try and fend off strong economic headwinds via support measures that have disappointed thus far.
• Well-defined technical parameters remain in play,
• Key short-term support in USD/CNH lies at CNH7.2392, the Sep 1 low.
• For bulls, a break of resistance at CNH7.3682, the Sep 8 high, would resume the uptrend and this would open CNH7.3749, the Oct 25 high - a major resistance and the all-time high.