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USD/CNH Rebound Continues

CNH

USD/CNH ran out of steam around 7.1870 in the NY session. We last tracked near 7.1750. For Monday's session the pair gained 0.75%, in line with broader USD indices. The 20-day EMA is near by at 7.1730, while the 50-day comes in at 7.1331. The CNY NEER still managed to edge higher though for Monday’s session (+0.13%, J.P. Morgan Index).

  • The domestic data calendar is quiet, which is likely to leave focus on domestic Covid trends. Yesterday’s fresh stay at home orders for Shijiazhuang and a 5-day lock down for the Baiyun area, weighed on China-related asset sentiment.
  • Coupled with recent deaths of elderly patients from the virus, which is still a part of the population that is lagging from a vaccination standpoint, is pushing back against any sense of a dramatic shift in the CZS in the near term.
  • Overnight the China Dragon Index lost 3.55%, following Friday's dip of 2.98%.
  • Elsewhere, China regulators asked banks to stabilize lending to construction/property related companies. This is seen as consistent with the recently announced 16-point plan to support this sector of the economy.

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