USD/CNH Steady, Outperforms EUR, Equities Boosted By Fiscal Stimulus

USD/CNH largely tracked recent ranges post the Asia close on Tuesday. We got to highs around 7.3250 in NY trade, but pulled back to 7.3144 by the close. This was a modest CNH loss, but outperformed broader USD gains elsewhere (BBDXY +0.31%). USD/CNY finished up near 7.3110, while the CNY NEER (J.P. Morgan Index) rose a touch to 123.67 (+0.09%).

• Focus was on the China government approving 1trn yuan in Q4 bond issuance, which pushes the fiscal deficit to 3.8% of GDP from 3% (see this link).
• Also noteworthy was a visit by China President Xi Jinping to the PBOC, which is a sign of potential greater focus on the economic rebound by the authorities (see this link).
• The fiscal news has been spoken about recently, with Rtrs stating such an announcement was likely yesterday. Still, we saw a meaningful rebound in the Golden Dragon index in US trade, up nearly 4%. This followed a modest +0.37% firming in the CSI 300 index in local onshore trade yesterday.
• Broader USD trends (particularly EUR weakness) likely diminished spill over to CNH.