FX Nugget: Can the PBoC defy gravity? 7.30 watch
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Nugget 1: USDCNY decides risk assets from here
The USDCNY is the most critical global bellwether at this juncture and the path ahead for risk assets is dependent on the PBoC now. If 7.30 holds, expect risk appetite to rebound materially.
The defense of the 7.30 handle in October-2022 marked the bottom for global equities, while we have seen melt-ups in equities on the back of the 7.20 reversal in both 2019 and 2020.
Chart 1: USDCNY will decide whether risk assets will rally from here