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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- The last few days have seen significant moves in the CNY, with USDCNY breaking above the key topside 200DMA and finding resistance at the 6.45 level.
- While CNY had first benefited from ‘safe-haven flows’ following the Ukraine invasion, fundamentals are currently showing that the risk reward remains biased towards CNY weakness in the medium term.
Link to full publication:
MNI MARKETS ANALYSIS - CNY.pdf
As the China 10Y bond premium (over US 10Y) has now completely ‘vanished’ (following the sharp increase in US LT bond yields), interest from CNY carry traders has fallen, therefore also pressuring CNY to the downside in the medium term. The chart below shows that the 10Y interest rate differential (between US and China) has smoothly led the exchange rate by 12 months.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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