The Jackon Hole economic symposium meeting could catalyse the USD vs CNH.
USDCNH – Weekly Chart
The USDCNH trades at 7.300, a crucial level after it was high in 2022. A failure to get above here could see a revival in the yuan.
Chinese stocks were able to mount a sharp rally late on Tuesday, with traders saying technical reasons were the cause of the move higher.
There was speculation that buying by state-backed funds was one of the reasons for the bullish change. The CSI 300 gauge dropped in each of the last two weeks, and previous incidents have seen purchases by the so-called “national team” to slow losses. Some other traders talked of a Caixin report from Saturday, which said China is considering stronger action to fight risks from local government financing vehicles.
“Most people I spoke to were quite baffled by the move this afternoon. There were all kinds of speculations but there has been no clear explanation,” said Willer Chen, senior analyst at Forsyth Barr Asia. But “it is also reasonable to see some technical rebound” given the steep losses recently, he added.
Foreign investors continued to sell Chinese stocks on a net basis, pulling 6.4 billion yuan ($875 million) from markets on Tuesday. That extends the record-selling streak to 12 days. According to Bloomberg, the turnover for Chinese stocks was around 800 billion yuan, which is in line with the average for the month.
Investors can look to Friday for comments from Fed Chair Jerome Powell after the Jackson Hole meeting, while Chinese stimulus could add to yuan strength.
