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CNH: USD/CNH Dips Sib 7.2500 Amid Equity Outperformance

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USD/CNH broke lower as onshore equities opened higher. We got to 7.2427, but sit back closer to 7.2500 in latest dealings. This leaves us sub the 100-day EMA (near 7.2590), while the 200-day is further south, close to 7.2330.

  • Hong Kong equities continue to rally as well, up close to +1.4%, while onshore markets are tracking higher as well, albeit with a lower beta. The focus remains on tech trends. Goldman Sachs raised its CSI 300 and MSCI China targets on DeepSeek optimism (per BBG).
  • Jack Ma will also reportedly meet with China President Xi Jinping, raising hopes of support for China's tech/private sector.
  • The chart below plots USD/CNH, which is inverted on the chart against the China to global equity ratio. We are seeing meaningful outperformance of China equities and unlike the Q3 period last year, the CNH is not leading this move. 

Fig 1: USD/CNH (Inverted) Versus China To Global Equity Ratio 

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USD/CNH broke lower as onshore equities opened higher. We got to 7.2427, but sit back closer to 7.2500 in latest dealings. This leaves us sub the 100-day EMA (near 7.2590), while the 200-day is further south, close to 7.2330.

  • Hong Kong equities continue to rally as well, up close to +1.4%, while onshore markets are tracking higher as well, albeit with a lower beta. The focus remains on tech trends. Goldman Sachs raised its CSI 300 and MSCI China targets on DeepSeek optimism (per BBG).
  • Jack Ma will also reportedly meet with China President Xi Jinping, raising hopes of support for China's tech/private sector.
  • The chart below plots USD/CNH, which is inverted on the chart against the China to global equity ratio. We are seeing meaningful outperformance of China equities and unlike the Q3 period last year, the CNH is not leading this move. 

Fig 1: USD/CNH (Inverted) Versus China To Global Equity Ratio 

Keep reading...Show less