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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.
CHINA
- The sharp consolidation in the Chinese Yuan in the past ten days has led to a strong rebound in EM FX, with PLN and BRL being the top performers among the EM world (excluding RUB), up 3.9% and 3.7%, respectively, against the US Dollar.
- We previously saw that EM FX portfolio managers generally reassess their risk when CNY depreciates sharply following the August 2015 episode (CNY 'devaluation) that generated a market shock (SP500 down 10% following that event).
- USDCNH is down 2.8% since its local high of 6.8380 reached on May 13, gradually approaching its ST support at 6.6350, which corresponds to the 38.2% Fibo retracement of the 6.3070 – 6.8380 range.
- Next level to watch on the downside stands at 6.60.
- Even though ST CNY momentum looks strongly bullish in the near term, the market uncertainty and MP divergence between US and China could limit the downward retracement on USDCNH.
- In addition, China officials will have to announce more easing (than currently priced in) in order to offset the negative economic forces.
- Sell-side analysts have been constantly reviewing their 2022 GDP growth expectations to the downside in recent weeks; a 4% growth for 2022 sounds more likely, but could be reviewed lower again as economic slowdown accelerates.
- Resistance to watch on the topside on USDCNH stands at 6.70.
Source: Bloomberg
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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