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USDCNH Breaks Through Overnight Low

CNH
  • USDCNH has broken through its overnight lows to narrow the gap with Tuesday's low of 7.2004. In late Asia trade, Reuters cited sources in reporting that Chinese state-owned banks were selling USD above 7.21 though weakness in Chinese equities at the time limited the move lower in USDCNH. Markets now sit either side of the 7.2100 handle, paring some of yesterday’s gains amid a steady move lower in the greenback through the European open.
  • Moves follow the July inflation release overnight, with CPI slipping into negative territory - albeit 0.1ppts above expectations. However, positive dynamics in the M/M read suggest some signs of less deflation potential ahead, compounded by more favourable base effects, may suggest headline inflation in y/y terms can track higher in H2. The NBS stated as much post this data indicating the y/y drop is temporary.

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