USD/CNH-USD/CNY Spread Moves Lower, Caixin Services PMI Miss Doesn't Impact Sentiment

Onshore USD/CNY has tracked higher in the first part of trading but couldn't sustain a move above 7.3100, last around 7.3030. Recent highs near 7.3275 hold from the start of this month, while the wedge with offshore USD/CNH has diminished (back to +200pips). USD/CNH is off earlier highs, last around 7.3220/30. Dips sub 7.3200 have been supported. This pair is following broader USD sentiment, which has softened, as US equity futures have moved back into positive territory. The weaker China Caixin PMI reading hasn't impacted CNH FX sentiment.

• The Caixin services PMI printed weaker than expected, at 48.4, versus 49.0 forecast and 49.3 last month. This was enough to drag the composite reading lower to 48.3 from 48.5 in September.
• Most of the detail was weak, although the employment sub-component saw a noticeable improvement.
• Prospects for a sharp turnaround in sentiment readings may be constrained given the continued rise in domestic covid case numbers through the early parts of November.