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USD/CNH Rebounds, But Yuan Higher In NEER Terms, Equity Weakness In Focus

CNH

By the US session on Monday, USD/CNH was back to 7.1550, right around highs from last Friday. We didn't extend higher though and dipped back sub 7.1500 by the close. The pair tracks near 7.1490 in early Tuesday dealing, with CNH having lost 0.35% for Monday's session, with the BBDXY up nearly 0.50%. USD/CNY finished up at 7.1434, while the NEER (J.P. Morgan index) rose 0.28% to 124.18.

  • This is the typical pattern we have seen when the USD rebounds amid a firmer yield backdrop, CNH's beta to such moves tends to be lower, which helps outperformance in NEER terms. US-CH yield differentials have moved off recent lows, but only marginally.
  • Today's data calendar has the Caixin services PMI on tap. The market looks for 50.5, versus 50.4 prior. The Caixin composite for Nov will also print. There is no expectation for this, the prior 50.4.
  • The other local focus point will be equity trends, we had the CSI 300 close at its lowest level since 2019 yesterday, with the CSRC Chairman stating after the close that the regulators will ensure the stable operation of capital markets (see this link).
  • The Golden Dragon index lost nearly 2.10% in Monday US trade.
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