CNH: USD/CNH Holds Below 7.30, Medium Term Lending Rates Due, Equities Heavy.
• The USD/CNH dipped below 7.3000 last week, following CNY fixing bias evidencing that the authorities are looking to depreciate the yuan gradually.
• For USD/CNH Friday’s high of 7.3140 look unlikely to be tested today, and the 20-day EMA continues to rise, currently at 7.2757.
• CNH/JPY surge last week following BoJ’s mixed message on rates, the pair get to 21.59 on Friday, just shy of Nov highs above 21.61. It has however fallen since then to be 21.46 in this morning’s trading.
• We await the decision on the 1-Year Medium Term Lending Rate and Volume announcement, where there is no expectations for a cut in the rate from 2.00%, with greater emphasis on the amount the facility is being utilized.
• Friday saw Hang Seng, CSI 300 and Shanghai down, whilst Shenzhen finished up, while onshore CGB yields resumed their rally with the 10-year finishing at new lows of 1.71%.