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USD/CNH Through 7.3200 As Local Equities Weaken Post On Hold 5yr LPR Decision

CNH

USD/CNH has continued to track higher. We got to 7.3250 in recent dealings, fresh highs back to last Thursday. Highs from that session were marked near 7.3500. Onshore spot has opened up firmer, rallying back through the 7.3000 level. The upside in onshore spot is capped at 7.3427 (+2% above today's USD/CNY fixing level), which may also represent somewhat of a loose cap for USD/CNH.

  • Sentiment has been weighed by no change in the 5-yr LPR rate, which has left onshore equities on the back foot in early trade. The consensus was for a 15bps cut to boost the under pressure growth backdrop.
  • The CSI 300 is comfortably sub 3800, and tracking at fresh lows back to November of last year. HK equities are also weaker, currently tracking close to session lows, off 1.5% at this stage.

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