USD/CNY Nears ’22 Peak As Yuan Remains On Defensive

MNI (London) - A narrower than expected monthly Chinese trade surplus and a light bid in the USD has the yuan on the defensive in early London trade, although ranges in both USD/CNH and USD/CNY are relatively contained.

• The moves come even with the PBoC deploying an even more forceful lean against yuan weakness via its ~USD/CNY mid-point fixing in recent sessions, along with the back-channel measures outlined by various source reports.
• USD/CNY bulls have forced the cross to move within touching distance of its ’22 peak (CNY7.3274), while the YtD high in USD/CNH (CNH7.3497) sits ~150 pips above current session highs.
• Policymakers will remain attuned to threats surrounding swift yuan depreciation (although most commentary pieces in the local media outlets expect the yuan to face less headwinds towards the end of this year).
• Elsewhere, the President of China’s Chief Economist Forum noted that the PBoC can lower interest rates further, but it should strike a balance to avoid too much pressure on bank NIMs and the yuan.