CNH: USD/CNH Finds Selling Interest Above 7.1900, Equities Outperform

Spot USD/CNH sits near 7.1715 in early Tuesday dealings, after CNH gained 0.14% for Monday's session. Broader USD sentiment faltered, the BBDXY off around 0.50%, while the DXY fell close to 0.65%. Spot USD/CNY finished up at 7.1694, while the CNY CFETS basket tracker edged down a little to 96.10 (per BBG). 

• USD/CNH technicals are broadly unchanged. There may be some focus on whether we can sustain sub 7.1700 level in the near term, but greater focus is likely to rest on potential support at the low 7.1500 area, which marked recent lows. On the topside the 50-day EMA resistance point remains intact, near 7.1910 currently.
• The USD suffered amid a pull back in US Tsy yields. We are off recent highs (the 10yr back to 4.38%), which pushed US-CH yield differentials lower. China's 10yr bond yield edged a touched higher yesterday, as China announced approval of a large scale dam project. Still, US-CH yield differentials remain within recent ranges, with the US leg likely to remain the dominant driver.
• In the equity space, positive trends continued, the CSI 300 index finishing close to 4086, fresh closing highs YTD. The Golden Dragon Index did lose a little ground in US trade for Monday, down 0.28%.
• US Tsy Secretary Bessent stated that the next round of talks with China officials may move beyond US-China trade and include China purchases of oil from Russia and Iran (per a CNBC interview).
• Elsewhere our China policy team noted: "European Commission President Ursula von der Leyen will warn Chinese Premier Li Qiang at a one-day summit in Beijing on July 24 that the state of trade relations is "unsustainable,” raising issues of China's industrial overcapacity, as well as lack of market access and free and fair competition, the official said." 

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg 
• RES 1: 96.860 - High Apr 07
• PRICE: 96.630 @ 16:49 BST Jul 21
• SUP 1: 95.900 - Low Jan 14  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support

Aussie 3-yr futures traded strong to start the week, buoyed by a global rally in core bonds. This again challenges resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Instead, a continuation lower would strengthen a bearish theme. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would refocus attention on 96.860, the Apr 7 high.