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USD/CNY Fresh 2024 Highs, But Very Gradual Yuan Depreciation Pace Looks Unchanged

CNY
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USD/CNY spot has made fresh highs back to November last year, albeit marginally. We got to 7.2484 in early spot dealings but sit back at 7.2475/80 now. This is around late April highs for the pair.

  • We are creeping back towards the daily trading limit (+2% above the fixing rate), which today rests around 7.2528.
  • Still, there doesn't appear to anything to suggest other than a very gradual pace of yuan depreciation. Today's USD/CNY fixing only rose 5pips, while the fixing error remains away from 2024 wides.
  • The CNH-CNY basis remains comfortably positive, but is also well below 2024 highs (last near +170 pips). USD/CNH was last near 7.2650, little changed for the session.
  • In the equity space, sentiment is better today, led by property names, as more cities announced easing housing curbs (CSI 300 last up near +0.50%).
  • Working the work other, onshore government bond yields remain anchored close to recent lows, leaving the US-CH yield differential still suggesting higher USD/CNH levels).
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USD/CNY spot has made fresh highs back to November last year, albeit marginally. We got to 7.2484 in early spot dealings but sit back at 7.2475/80 now. This is around late April highs for the pair.

  • We are creeping back towards the daily trading limit (+2% above the fixing rate), which today rests around 7.2528.
  • Still, there doesn't appear to anything to suggest other than a very gradual pace of yuan depreciation. Today's USD/CNY fixing only rose 5pips, while the fixing error remains away from 2024 wides.
  • The CNH-CNY basis remains comfortably positive, but is also well below 2024 highs (last near +170 pips). USD/CNH was last near 7.2650, little changed for the session.
  • In the equity space, sentiment is better today, led by property names, as more cities announced easing housing curbs (CSI 300 last up near +0.50%).
  • Working the work other, onshore government bond yields remain anchored close to recent lows, leaving the US-CH yield differential still suggesting higher USD/CNH levels).