USD/CNH Tags Another Fresh YtD High, As Signs Of Policymaker Discomfort Grow

MNI (London) - USD/CNH has registered fresh YtD highs beyond CNH7.2800, bulls now target CNH7.30.

• The latest official PMI data will have done little to calm fears surrounding the trajectory of the Chinese economy, while fresh signs re: the curtailing of any remaining animal spirits within China were noted.
• Recent comments via a PBoC-backed newspaper pointed to a basically stable yuan in H223, with the currency expected to move in a “reasonable range.”
• Elsewhere, RTRS sources flagged that the PBoC has surveyed some banks re: their USD deposit rates, guiding one bank to lower their rate. This comes after noted capital flow watcher Brad Setser pointed to Chinese exporters hoarding FX owing to rate differentials, despite a recent reduction in those deposit rates.
• BBG flagged USD/CNY sales by Chinese state banks around CNY7.2600.
• The strong CNY bias in the USD/CNY mid-point fixing moderated from yesterday’s YtD extremes, but still sat over 200 pips.
• The CSI 300 added 0.5%, with Thursday’s comments from Premier Li re: targeted measures to encourage consumer spending on household products and state-run media running a piece which pointed to mainland equities nearing a bottom, per analysts, factoring in.
• Net mainland equity inflows via the Hong Kong Stock Connect schemes (a relatively tame CNY3.7bn) also helped.