CNH Underperforms USD dip

USD/CNH briefly dipped sub 6.7400 before support emerged. This was fresh lows back to this time last week. CNH did underperform broader USD softness though. USD/CNH is just above 6.7450 currently. Beyond the high 6.7300 region, 6.7200 could be the next downside target. Also note that 6.7129 is the 50-day MA. On the topside, selling interest should still be seen between 6.7700/6.7800.

• There are no major data releases today, with the next major release not scheduled until this coming Sunday, when official PMIs print.
• The focus is likely to rest on the Biden/Xi call which will take place today. There is still no clarity on whether US House Speaker Pelosi's trip to Taiwan will actually take place.
• The Golden Dragon index rose 1.7% overnight in US trading, in line with broad based equity gains, although delisting risk remains, with US-China authorities not yet reaching an agreement around auditing of China listed companies.
• Onshore China media reports that there is a low chance of a further drop in short-term interest rates. Short term rates have been declining amid a system flush with liquidity.
• In any event, 2yr US-CH government bond yield spreads have not been moving in favor of the USD. We are back to around +80bps, down from recent highs above +100bps.