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USD/CNH Touches Multi-Month Highs on Regional Equity Weakness

FOREX
  • Currency markets across Europe and the US are generally treading water ahead of Tuesday NY hours, with markets on pause ahead of the BoJ decision and key Eurozone data later this week. NOK has been more active, and remains toward the lowest levels of the year. The April high in EURNOK is at 11.6929, which was also the highest print since 22nd April. A clear break through the 11.7000 psychological level, would see next resistance at 11.8123.
  • Following another negative regional close in China and Hong Kong, weakness across CNH and CNY persists into NY hours, tipping USD/CNH to the highest level since mid-March. Pair has now printed seven consecutive sessions of higher lows, and is narrowing the gap with 6.9506, the 200-dma.
  • Progress through here would open 6.9971 over the medium-term, ahead of 7.0362 - the 50% retracement for the Oct - Jan downleg. Worsening trade tensions with the US remain a key driver - particularly following weekend reports that the US requested South Korean firms do not backfill chip orders to China should US-listed firms be barred access to China.
  • Focus Tuesday turns to new home sales and consumer confidence data from the US, as well as further regional Fed releases: the Richmond Fed manufacturing index and Dallas Fed services activity. The speaker slate is light, with the Fed remaining inside the pre-FOMC media blackout period.
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