USD/CNH Tracking Lower, Near Week To Date Lows, Few Macro Drivers Of Note

USD/CNH is tracking lower as the Thursday session unfolds. The pair last near 7.1130, around 0.30% stronger in CNH terms. The USD BBDXY index is off 0.15%, although this is largely reflective of NZD and other higher beta FX gains. USD/JPY is close to unchanged, so this isn't providing much positive beta to CNH at this stage.

• Cross asset sentiment onshore is not positive from an equity standpoint, with local indices down a touch in terms of aggregate performance. Onshore bond yields are steady, outside of a rise in the 30yr yield.
• CNH implied yields are up from recent lows, but sub 2024 averages.
• The rest of USD/Asia is mostly lower today (except for PHP), which is likely providing some support, although CNH's beta with respect to such moves has usually been low in recent months.
• One possibility is more spot USD selling by exporters into month end. There has been chatter around large FX deposits held by exporters, covered in China Policy team's Press Digest this morning. Exporters may be mindful of shifting FX trends ahead of the Fed easing cycle and be lightening up on FX deposits.
• USD/CNY spot has moved lower, down 0.20% to 7.1130, leaving no basis with CNH spot.
• For USD/CNH lows this week aren't too far away at 7.1070.