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CNH Outperforms Broader USD Strength, PMIs In Focus

CNH

USD/CNH found offers above 6.7100 again post the Asia close. From there we dipped to the low 6.6900 region, before rebounding back above 6.7000. This is very much within recent ranges for the pair, but CNH outperformed broader USD strength overnight, see the chart below.

  • The data focus today is on the official PMI prints. The market expects the manufacturing PMI to rise to 50.5 from 49.6 last month. The non-manufacturing PMI is also expected to rise to 50.5 from 47.8 previously.
  • The other focus point was reported comments from China President Xi, which appeared to recommit to China's dynamic Covid zero strategy.
  • The president warned against 'herd immunity' and stated the country would rather affect economic development a little than risk the lives of children and the elderly. Note earlier in the week Premier Li Keqiang stated it was 'arduous' task to stabilize employment and boost the economy.
  • Whilst China health officials have cut Covid quarantine times, in the same release they have also standardized approaches to mass testing and lockdowns.

Fig 1: CNH Outperforms USD Bounce

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USD/CNH found offers above 6.7100 again post the Asia close. From there we dipped to the low 6.6900 region, before rebounding back above 6.7000. This is very much within recent ranges for the pair, but CNH outperformed broader USD strength overnight, see the chart below.

  • The data focus today is on the official PMI prints. The market expects the manufacturing PMI to rise to 50.5 from 49.6 last month. The non-manufacturing PMI is also expected to rise to 50.5 from 47.8 previously.
  • The other focus point was reported comments from China President Xi, which appeared to recommit to China's dynamic Covid zero strategy.
  • The president warned against 'herd immunity' and stated the country would rather affect economic development a little than risk the lives of children and the elderly. Note earlier in the week Premier Li Keqiang stated it was 'arduous' task to stabilize employment and boost the economy.
  • Whilst China health officials have cut Covid quarantine times, in the same release they have also standardized approaches to mass testing and lockdowns.

Fig 1: CNH Outperforms USD Bounce

Keep reading...Show less