USD/CNH retreats from YTD high to sub-7.2300 as PBoC, Asian lobbyists trigger China optimism

• USD/CNH reverses from seven-month high, prints the first daily loss in four.
• Lower-than-expected PBoC USD/CNY Fix, push for easing of Chinese companies’ offshore listing rules propel market sentiment.
• US Durable Goods Orders, CB Consumer Confidence will decorate economic calendar.
• Cautious optimism underpins Yuan buying despite looming economic fears about China growth.

USD/CNH remains pressured around the intraday low of 7.2138, near 7.2240 by the press time, as it prints the first daily loss in three while reversing from the highest level since November 2022 during early Tuesday.

In doing so, the offshore Chinese Yuan (CNH) pair benefits from the People’s Bank of China’s (PBoC) latest move, as well as optimism about China's economy, as well as the risk-positive headlines from the Asian lobbyists.

That said, PBoC’s lower-than-expected fixing of the USD/CNY price recently pushed back the fears surrounding the world’s second-biggest economy. That said, the PBoC set the USD/CNY central rate at 7.2098 on Tuesday, versus the previous fix of 7.2056 and market expectations of 7.2194. It's worth noting that the USD/CNY closed near 7.2425 the previous day. With this, the Chinese central bank sets the onshore Yuan (CNY) rate at the lowest level since November 2022. 

On the same line, headlines from Reuters suggesting the Asian lobby group's push for an easing of Chinese companies' overseas listing also underpins the market's latest optimism about China, which in turn weighs on the USD/CNH price.

“China's new offshore listing rules for domestic companies have left bankers and lawyers who work on listings unsure how to take on liabilities and how to avoid breaching tightened confidentially rules, Asia's largest financial lobby group said on Tuesday,” said Reuters.

“Lobby group ASIFMA (the Asia Securities Industry and Financial Markets Association) counts leading global investment banks Goldman Sachs, JPMorgan Chase & Co, and UBS Group among more than 170 financial firms who are association members,” added the news.

Elsewhere, the easing of the Russia-linked geopolitical concerns, after the Wagner Group drops Moscow’s mutiny and President Vladimir Putin praised the mercenary's decision to retreat, also allow traders to remain optimistic and weigh on the USD/CNH price.

Amid these plays, S&P500 Futures print the first daily gains in three by bouncing off the lowest levels in eight days, up 0.20% intraday near 4,380 at the latest. That said, the US 10-year and two-year Treasury bond yields remain depressed at around 3.73% and 4.69% by the press time.

Looking forward, US Durable Goods Orders for May, expected -1.0% versus 1.1% prior, as well as the US Conference Board’s (CB) Consumer Confidence for June, expected to arrive at 103.90 versus 102.30 prior, will direct intraday moves of the USD/CNH pair. Additionally, important will be European Central Bank (ECB) President Christine Lagarde’s speech at the ECB Forum.

Technical analysis

Although the overbought RSI conditions challenge the USD/CNH buyers below the late 2022 peak of around 7.2600, a two-month-old rising trend channel, currently between 7.2640 and 7.1690, suggests further upside of the offshore Chinese Yuan pair.