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USD/CNH Rebounds With USD/JPY, Albeit With Lower Beta

CNH

USD/CNH sits just off session highs, last around 7.1430/40. We got to 7.1528 in earlier dealings, with the pair following USD/JPY higher in the first part of trade, albeit with a fairly low beta. CNH is off a little over 0.10% at this stage, while yen has fallen more than 1%. Intra-session lows from Monday were 7.0838. Note onshore spot finished up at 7.1396 yesterday.

  • CNH is likely to broadly follow USD/JPY trends in the near term, as focus remains on broader risk trends and the extent of carry trade unwinds.
  • The CNH v JPY correlation is still 67% for the past month, based off daily percentage changes.
  • USD/CNH remains will below all key EMAs, while note yesterday's early highs were 7.1663.
  • Locally, the data calendar is empty until tomorrow's July trade figures. Note on Friday we have July CPI data.
  • Some focus will be on local bond yields, with state banks bond sellers yesterday (per BBG, see this link). This is likely part of the broader efforts to curb yield downside by the authorities.

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