Free Trial

CNY Extends 2023 Strength, Options Take Note

CHINA
  • With onshore trade closed, worth noting the extension of CNY strength since the turn of the year, with USD/CNY touching new multi-month lows Thursday. USD/CNY closed below 6.87 for the first time since August (USD/CNY then rallied north of 7.00 after a particularly hawkish Fed meeting) and is now within realistic range of the 6.8294 200-dma for the first time since April last year.
  • Options markets have taken note, with broadening demand for CNY upside protection (evident in the downtick for USD/CNH 3m risk reversals, which now show the smallest premium for USD/CNH calls over puts for 4 months). Similarly, the 3M USD/CNH smile skew has moderated considerably away from OTM calls.
  • A number of factors behind the sturdier CNH backdrop, with re-opening momentum building (HK border less restrictive), steadier international relations (Australia coal story yesterday) and rallying equities.

To read the full story

Close

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.