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CNY Spot - CNY Fixing Spread Getting Close To Multi-Year Wides

CNH

The USD/CNY fixing will print in around 15mins. Following the break of 7.00 in USD/CNH overnight, this print will be under extra focus. Onshore spot closed at 6.9946, but the 4:30pm level, which feeds into the fix, was 6.9775. The chart below shows the spread between the USD/CNY spot level and the USD/CNY fixing level. At +845pips on this spread, we are getting close to wides on the metric seen over recent years.

  • Obviously this spread can come down via either higher USD/CNY fixing levels, or spot USD/CNY coming lower.
  • As has been the case in recent weeks, the CNY fixing bias has been heavily leaning against depreciation pressures.
  • This trend is likely to continue today, although we will watch for fresh highs in the fix for this cycle (current high is 6.9160).
  • The authorities will be mindful though of a sharp rise in the USD/CNY fix will reinforce bearish expectations, so it faces a delicate balance act from this standpoint.

Fig 1: USD/CNY Spot - USD/CNY Fixing Spread Close To Multi Year Highs

Source: MNI - Market News/Bloomberg

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