📝 See USD/CNH Rising to 7.11-17 Range: UBS Strategy

A few headlines caught market's attention: Blinken's potential China visit, China having lowered the onshore USD deposit rate by 100bp and the much weaker trade balance.

USDCNH spot dipped in early trading on the back of the positive sentiment from the potential Blinker visit and market speculating exporters selling USD with the lower USD deposit rate. However, spot has since bounced above 7.1300 post the weaker trade data. I reckon the direction for spot is still higher from here, as the positive sentiment could be quickly faded while the speculation of exporters USD selling probably won't materialize. I am looking at the 7.11-7.17 range in the short term.

Swaps also traded higher on Wednesday morning on Wednesday on the back of funding demand from equity Inflows and RI-IS IMM demand. I reckon swaps have likely found a temporary base and will retrace higher in the next few sessions.

- UBS Strategy