USD/CNH Rebounds Close To 200-Day MA, Equity Slump Persists

USD/CNH spent most of the Wednesday session climbing higher. The pair sits back above 7.1500 in early Thursday trade. Wednesday highs were near 7.1545, just short of the simple 200-day MA. CNH lost 0.42% for Wednesday's session against a BBDXY gain of 030%. USD/CNY ended the session at 7.1386, while the CNY NEER (J.P. Morgan Index) fell 0.16% to 123.34.

• The latest piece from the MNI China Policy team (out late yesterday) suggests LPRs will fall in 2024 but any decline will be moderate (see this link for more details). Similar rhetoric was seen in the onshore China Securities Journal today.
• Easier policy settings are one factor that is seen limiting the yuan rebound into year end and in January, which is typically a strong seasonal period for the currency.
• Also noteworthy was the poor onshore equity finish yesterday. To recap, the CSI 300 fell 1.10% to sub 3300, which is fresh cyclical lows back to early 2019.
• Still, the authorities may guard against a sharp drop in the yuan before year end. Dec highs in the pair have come in close to 7.2000.
• The local data calendar is largely empty, with just FDI for Nov and Swift global paymetn figures on tap for today/tomorrow.