Yuan Rebounds, But Spot USD/CNY Finishes Above 7.2000 In Monday Trade

USD/CNH sits near 7.2525 in early Tuesday trade. The currency gained just over 0.30% on Monday, reversing a little under half of Friday 0.75% sell off. Spot USD/CNY finished up 7.2114, also sub Friday's 7.2292 closing level. Still, dips under 7.2000 were supported in Monday trade. The CNY NEER (J.P. Morgan index) rose to 124.75 (+0.20%).

• Focus again today is likely to be on the USD/CNY fix. Yesterday's 4:30pm close (a fixing input) for USD/CNY was 7.2084 well below Friday's 7.2283 level, while weaker USD levels more broadly should also aid a lower fixing.
• Still, Bloomberg notes that traders indicated state owned banks were less aggressive sellers of USDs to defend the local currency yesterday. No doubt this was reflected in the fact that spot USD/CNY climbed back above 7.2000 as the session unfolded. This level had previous served as a strong resistance point.
• If 7.2000 is no longer a firm line in the sand for onshore spot, dips in USD/CNH may remain supported given the general bias around easier policy settings the authorities have hinted at in recent weeks. For USD/CNH key support to watch lies at the 50-day EMA (CNH7.2056), with initial support at the 20-day EMA (CNH7.2126).
• Yesterday's lows were at 7.2325, which coincided with recent highs back in Jan/Feb, so this is another potential support point.
• PBoC Governor Pan stated that there are positive signs in the country's property market (amid other comments) see this BBG link for more details. The local data calendar is empty today.