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CNH
MNI (London) - The uptick from lows in the USD biases USD/CNH back to near unchanged levels, above CNH7.2800.
- Our policy team’s latest exclusive (click for full story) noted that traders and policy advisers are acutely aware of the difficulties that the PBoC faces when it comes to defending the CNY7.30 mark in the onshore yuan, flagging continued use of the yuan’s mid-point fixing and offshore liquidity restrictions as the current preferred tools for the Bank.
- Beyond the immediate term, the same people suggest that the yuan could still strengthen towards the end of the year, which is in line with the thought process flagged by numerous state-run media outlets in recent weeks.
- A quick reminder that the reported PBoC efforts to remove excess offshore liquidity provided support to the redback earlier this week, although the impact of the move in forward points has faded from extremes in the time since, with suggestions that state-owned banks were quick to return to the market with liquidity.
- The PBoC’s mid-point fixing lean (towards CNY strength) has been well-documented in recent weeks.
- As we flagged elsewhere, Thursday saw the record run (based on data back to ’16) of outflows from mainland Chinese equities came to an end, which would have provided incremental support for the yuan.
- Beyond the immediate term, the same people suggest that the yuan could still strengthen towards the end of the year, which is in line with the thought process flagged by numerous state-run media outlets in recent weeks.
- USD/CNH remains comfortably within the range stablished in recent weeks, with well defined technical parameters in play and moving averages remaining in bull mode.
Fig. 1: USD/CNH
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
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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