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CNH​​ Stabilizes After Regulator Warning

CNH

USD/CNH had a volatile overnight session. Upside pressure took us close to 6.8900 before plunging back to 6.8600, which was driven by a wire headline that China's FX regulator warned banks against aggressively selling the yuan. The regulator went on to tell Reuters that it hadn't seen unreasonably large buying of foreign exchange by domestic financial institutions.

  • USD/CNH rebounded back above 6.8800 following this dip but didn't get back close to the 6.8900 level. The pair currently tracks around 6.8760.
  • There could be renewed focus on today's fixing, given yesterday's downside surprise of -37 pips in USD/CNY terms and the regulator warning from overnight.
  • Onshore the other focus point is around renewed stimulus efforts. The State Council has readied a 19 point policy plan to help keep economic growth within a reasonable range, according to onshore media (see this link for more details).
  • China equities underperformed yesterday the composite index finished down close to 2%. The China Dragon index enjoyed a better overnight session though, at +2.49%.

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