Weaker Equities/Deposit Rate Cut Calls Weigh On CNH

USD/CNH moved off session highs post the Asia close but couldn't sustain moves sub 6.9000. We currently track just above this level, having weakened slightly in CNH terms for Monday's session, despite a pullback in USD indices. Monday session highs came in around 6.9130 for USD/CNH. The CNY NEER eased back 0.21% to 125.06, per the J.P. Morgan index.

• Reuters noted, during London hours, that China is urging local bank to cut deposit rates, in order to boost investments and reduce the savings pool (see this link). This is likely to have weighed on CNH sentiment at the margins.
• The other headwind for the currency remains on-going equity market weakness. The Golden Dragon index lost another 2.40% in Monday trade in the US. This was the fifth straight loss for the index and comes after onshore equities extended losses in Monday trade (the CSI 300 lost 1.24% and is now comfortably below its simple 200-day MA).
• Northbound stock connect flows were -3.82bn yuan for Monday, following -7.62bn in outflows last Friday.
• The local data calendar remains quiet today.