USD/CNH was mostly supported on dips through Friday trade, although the pair couldn't get beyond 7.2664. We track near 7.2625 in early Monday dealings. USD/CNY spot finished up on Friday just above the 7.2500 level.

  • USD/CNH is wedged between the 50 (7.2721) and the 100-day EMAs (7.2581). Thursday intra-session lows sit back at 7.2032, while July 23rd marked the recent high (7.2973).
  • Last week's easings from the PBoC signal a renewed focus on the growth backdrop. This suggests greater tolerance for yuan weakness, although US-CH yield differentials ticked down at the end of last week (2yr spread to +286bps, 10yr spread to +200bps).
  • US PCE data printed close to expectations on Friday, with markets remaining fully priced for a September easing. On Saturday, China June industrial profits data printed at +3.6% y/y, versus 0.7% in May. We are still comfortably below H2 2023 profit growth levels though.
  • China equity sentiment finished the end of last week slightly better, the CSI 300 up 0.29%, while in Friday US trade, the Golden Dragon index was up 1.22%.
  • Note this week and next see China companies listed in Hong Kong pay more than $30bn in dividends, per Bloomberg calculations.

CNH: USD/CNH Supported On Dips, Hong Kong Dividends This Week & Next

Last updated at:Jul-28 22:19By: Jonathan Cavenagh

USD/CNH was mostly supported on dips through Friday trade, although the pair couldn't get beyond 7.2664. We track near 7.2625 in early Monday dealings. USD/CNY spot finished up on Friday just above the 7.2500 level.

  • USD/CNH is wedged between the 50 (7.2721) and the 100-day EMAs (7.2581). Thursday intra-session lows sit back at 7.2032, while July 23rd marked the recent high (7.2973).
  • Last week's easings from the PBoC signal a renewed focus on the growth backdrop. This suggests greater tolerance for yuan weakness, although US-CH yield differentials ticked down at the end of last week (2yr spread to +286bps, 10yr spread to +200bps).
  • US PCE data printed close to expectations on Friday, with markets remaining fully priced for a September easing. On Saturday, China June industrial profits data printed at +3.6% y/y, versus 0.7% in May. We are still comfortably below H2 2023 profit growth levels though.
  • China equity sentiment finished the end of last week slightly better, the CSI 300 up 0.29%, while in Friday US trade, the Golden Dragon index was up 1.22%.
  • Note this week and next see China companies listed in Hong Kong pay more than $30bn in dividends, per Bloomberg calculations.

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