USD/CNH Dip Short Lived, But remains Sub 50-Day MA

USD/CNH dipped close to 6.6800 overnight on headlines that US President Biden may roll back tariffs as soon as this week. This was short lived though and we pushed back towards 6.7000. We track slightly lower this morning at 6.6920.

• The short lived reaction likely reflected the fact that the decision is reportedly not final and could also slip past this week. It was also noted that a new probe could be launched into China industrial subsidies.
• Such a backdrop is arguably not surprising, as the US administration still appears somewhat divided on the tariff issue, with some looking for inflation relief, but also not wanting to appear soft on China.
• Still, the market may be mindful that any tariff reduction announcement (even if accompanied with other action around industrial subsidies) could see a knee jerk move lower in USD/CNH. Spot continues to hold below the 50-day MA (6.7034).
• Other focus points will be the nudge higher in covid case numbers, although for Beijing and Shanghai we remain below double digits.
• The June Caixin Services PMI also prints today, expected at 49.6 versus 41.4 previously.