Will USD/CNH Break Down Through the 50-Day MA?

USD/CNH continues to find support sub 6.6800. We track close to this level in early trade today. Note the 50-day MA comes in at 6.6801, a level USD/CNH hasn't been meaningfully below since mid-March.

• The sense around China asset sentiment remains positive. The China Golden Dragon index gained 11.1% last week, the best weekly gain since mid-March. We are now within sight of a test of the 200 day MA for this index.
• While this reflects hopes that the worst of the China regulatory crack down is behind us, improving economic momentum is also a factor.
• The market expects this week's PMIs to move back into expansion territory for manufacturing (50.5 expected) and non-manufacturing (50.1) in terms of the official readings. The Caixin PMI is expected to recover to 49.4 from 48.1 last month.
• A further easing of restrictions announced by Beijing and Shanghai around Covid will also help sentiment around the economic outlook.
• We have seen some slowdown in terms of onshore equities outperforming the rest of the world, but northbound equity flows were strong towards the tail end of last week.
• It was also announced late last week that the PBoC will create a yuan reserve pool with the BIS and 5 other regulators to provide liquidity during times of market stress.
• The regulatory participants will be from Indonesia, Malaysia, Hong Kong, Singapore and Chile, with each contributing a minimum 15bn yuan. The funds will be placed with the BIS.