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USD/CNH Rangebound, China Observes Holidays

CHINA YUAN

Spot USD/CNH sold off sharply on Wednesday, as hopes for progress in fiscal talks between the Trump administration & House Democrats lent a helping hand to broader risk appetite. After trading sideways in Asia-Pac hours, the rate lost altitude in Europe, hitting a one-week low.

  • USD/CNH has held a fairly tight range so far, which is not surprising given that China is off for holidays. The pair has edged higher and last trades +42 pips at CNH6.7880, just shy of session highs. A push through Sep 24 high of CNH6.8462 would draw attention to Sep 9 high of CNH6.8610. Conversely, bears see Sep 16 cycle low of CNH6.7424 as their main near-term target, as a break here would confirm the resumption of a downtrend.
  • A week-long celebration of the People's Republic of China's birthday has started today and mainland markets won't reopen until next Friday. We'll see some data in the meantime though. China's foreign reserves come out on Wednesday and Caixin Services & Composite PMIs are due Thursday.

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