MNI BRIEF: China Wants U.S. Firms To Deepen Investment

MNI China Daily Summary: Tuesday, July 23

MNI: PBOC Net Drains CNY408.7 Bln Via OMO Tues

MNI: PBOC Sets Yuan Parity Lower At 7.1334 Tues; -1.30% Y/Y

CHINA PBOC CONDUCTS CNY267.3 BILLION VIA 7-DAY REVERSE REPOS TUES

CHINA SETS YUAN CENTRAL PARITY AT 7.1334 TUES VS 7.1335

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ECB Not Currently Concerned About Core Goods Re-acceleration (2/2)

Core Goods Pipeline Pressures Yet To Stall Disinflation Progress (1/2)

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USDCAD Potential Month-End Upward Pressure

CANADA
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  • USDCAD has pushed higher to ~1.3670 with the S&P e-mini reversing initial gains seen after the cash open, although it remains below Friday’s high of 1.3696.
  • There could be a softening in equity correlation in the near-term, with Credit Agricole seeing the strongest USD buy signal vs the CAD for their month-end rebalancing model (as noted above).
  • The earlier low of 1.3632 marked another step closer to support at 1.3607 (50-day EMA) although the technical trend still points higher with resistance at 1.3763 (Apr 22 high).
  • Latest CFTC positioning showed only a modest trimming of CAD net shorts as of Apr 23, to -33.7% of open interest from the -34.9% the week prior after weak core CPI metrics helped drive the largest net short position since Jan 2019.
  • That modest trimming came ahead of softer than expected retail sales along with declines for manufacturing and wholesale sales.
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  • USDCAD has pushed higher to ~1.3670 with the S&P e-mini reversing initial gains seen after the cash open, although it remains below Friday’s high of 1.3696.
  • There could be a softening in equity correlation in the near-term, with Credit Agricole seeing the strongest USD buy signal vs the CAD for their month-end rebalancing model (as noted above).
  • The earlier low of 1.3632 marked another step closer to support at 1.3607 (50-day EMA) although the technical trend still points higher with resistance at 1.3763 (Apr 22 high).
  • Latest CFTC positioning showed only a modest trimming of CAD net shorts as of Apr 23, to -33.7% of open interest from the -34.9% the week prior after weak core CPI metrics helped drive the largest net short position since Jan 2019.
  • That modest trimming came ahead of softer than expected retail sales along with declines for manufacturing and wholesale sales.