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Continued Minimal Deviations Between Mid-Point Fixing & Expectations

CNY

The PBoC USD/CNY mid-point fixing continues to show a minor bias towards a weaker yuan when compared to broader market expectations, although the deviation between the two is limited, as shown in the chart below i.e. the PBoC hasn't shown much in the way of outright, overt pushback against the recent strengthening, at least from a fixing perspective. A quick reminder that the CFETS RMB index moved to the highest level witnessed since '16 last week.


Fig. 1: USD/CNY vs. Differential Between USD/CNY Mid-Point Fixing & BBG Survey Estimate

Source: MNI - Market News/Bloomberg


  • As we flagged earlier, the weekend saw policymakers and state-owned media highlight issues which could push back against the to the continued swift appreciation of the CNY, with the authorities keen to maintain the message that the CNY will operate in a 2-way environment around "basically stable" levels.
  • If USD/CNY does continue its move lower then technical support at the following levels may come into play:
  • CNY6.3554 - Low May 17 2018
  • CNY6.3292 - Low May 11 2018 & key support
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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