USD/CNH Within Recent Ranges, Eyes on Stocks Post Levy Cut

USD/CNH sits lower in the first part of dealing today, the pair last in the 7.2860/70 region, although liquidity will likely be light at this stage. We finished up in NY on Friday at 7.2948, a CNH loss of 0.20%. The pair was mostly on the front foot post the Asia close, getting above 7.3000 (with higher US front end yields boosting the USD) before selling interest emerged. USD/CNY finished at 7.2873, while the CNY NEER (J.P. Morgan index) climbed 0.22% to 122.02.

• Over the weekend it was announced that the authorities will cut the stock trading levy to 0.05% from the current 0.1%, effective today. The authorities will also curb IPO activity and lower the margin ratio for margin trading (see this link).
• The CSI 300 ended last week near 3700, down nearly 2% (for the week) and the third straight weekly loss. The Golden Dragon index was around flat in Friday US trade, but higher for the week.
• CNH should benefit, all else equal, from any improvement in equity sentiment from the above measures.
• Measures to boost the housing market were also announced late on Friday (see this link), but they didn't have a material impact on aggregate sentiment (the CSI 300 real estate index did rise 1.25% on Friday).
• The local data calendar is empty until Thursday, when official PMIs for August print. July industrial profits released yesterday printed at -6.7% y/y, versus -8.3% prior.