USD/CNH Rebounds, Q4/Dec Data On Tap, Yellen & Liu He Meeting Tomorrow

After failing to hold sub 6.7000 late yesterday, USD/CNH recovered further post the Asia close. The pair got close to 6.7500 before drifting lower, we currently track around the 6.7425 level. CNH ended Monday's session 0.43% weaker against the USD, which underperformed the broader USD indices (BBDXY up 0.22%, DXY +0.16%). The focus today is Q4 GDP and the Dec run of monthly activity readings.

• Market expectations, are not surprisingly fairly downbeat, with the covid wave during December expected to crimp activity, particularly in the consumer/service related sectors. Q4 GDP is expected to fall -1.1% q/q, see this link for more details.
• As we noted yesterday, the market has tended to look through recent softer than expected data outcomes, as it focuses on the 2023 outlook and the shift away from CZS.
• Profit taking flows may also be coming into the market ahead of next week's LNY holiday period, China markets are out for all of next week. On the upside, highs from last Thursday sit close to 6.7740, beyond that is the 6.8000 level. On the downside is yesterday's low just under 6.7000.
• Elsewhere, US Treasury Secretary Yellen will meet with China Vice Premier Liu He tomorrow in Zurich. This will be the first face to face meeting between the pair, with an exchange of views expected on macroeconomic developments and other economic issues.