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USD/CNH Probing Below 7.20


USD/CNH shows below CNH7.20 for a second day in a row, benefitting from the latest leg lower in the USD ahead of the impending U.S. CPI release, continued whispers surrounding the potential for Chinese fiscal stimulus and yesterday’s firmer than expected domestic credit data.

  • Weakness in benchmark domestic equity indices limited the move lower in USD/CNH, with the CSI 300 shedding 0.7% on the day (net inflows to mainland equities via the HK/China Stock Connect schemes were very limited on the day).
  • USD/CNH has sown as low as CNH7.1857 and last deals at CNH7.1930.
  • 5-Year IRS rates and 10-Year CGB yields were flat on the day, providing little outright impetus but some support vs. USD on a cross-market basis.
  • The PBoC’s lean towards yuan strength via the USD/CNY mid-point fixing remains evident, albeit operating off the recent YtD extremes.
  • The upper end of the well-defined uptrend channel that was in play between February and June has been breached, leaving bears looking to the Jun 22 low (CNH7.1699) as the initial area of technical support. Beyond there lies the 50-day EMA.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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