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CNH Falls Against Safe Havens

CNH

USD/CNH followed broad USD gyrations post the Asia close. We got close to 6.7300 before sliding back to 6.6800. We currently sit just below 6.6900.

  • CNH underperformed safe havens in the G10 space. CHF/CNH bounced strongly following the SNB’s hawkish rate hike, while CNH/JPY once again couldn't sustain levels above 20.00 and EUR/CNH also rebounded back above 7.00.
  • A lot will depend on today's BoJ meeting for near term direction in CNH/JPY though.
  • Still, the extent to which other major central banks are turning more hawkish (beyond just the Fed), may highlight the policy divide with China. The general consensus still appears to be for further easing in H2 from the PBOC.
  • Onshore retailers are highlighting the weak consumer demand backdrop, while the US envoy to China expects the country to persist with its Covid-zero strategy into 2023.
  • This comes after it was reported earlier in the week that Shanghai will mass test the whole city weekly until the end of July to prevent Covid cases resurging.
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USD/CNH followed broad USD gyrations post the Asia close. We got close to 6.7300 before sliding back to 6.6800. We currently sit just below 6.6900.

  • CNH underperformed safe havens in the G10 space. CHF/CNH bounced strongly following the SNB’s hawkish rate hike, while CNH/JPY once again couldn't sustain levels above 20.00 and EUR/CNH also rebounded back above 7.00.
  • A lot will depend on today's BoJ meeting for near term direction in CNH/JPY though.
  • Still, the extent to which other major central banks are turning more hawkish (beyond just the Fed), may highlight the policy divide with China. The general consensus still appears to be for further easing in H2 from the PBOC.
  • Onshore retailers are highlighting the weak consumer demand backdrop, while the US envoy to China expects the country to persist with its Covid-zero strategy into 2023.
  • This comes after it was reported earlier in the week that Shanghai will mass test the whole city weekly until the end of July to prevent Covid cases resurging.