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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.
CNH
Spot USD/CNH reversed earlier gains after the PBOC set the yuan reference rate in line with expectations. The rate last deals at CNH6.4366, down 82 pips on the day.
- China's central bank fixed the mid-point of permitted USD/CNY trading band at CNY6.4098, virtually in line with average sell-side estimate.
- This stood in contrast to the considerable weak bias in yesterday's fixing, which saw the yuan reference rate set ~100 pips above the expected level.
- The swift return to normalcy in yuan fixings provides evidence of the PBOC's measured approach to managing yuan moves, which may have resulted in some fresh demand for the redback.
- The technical needle for USD/CNH is still pointing north after two consecutive days of strong gains, but bulls should beware of the fact that the RSI is pulling back below 70. Consolidation below that threshold would signal potential for a firmer reversal.
- Losses past the 200-DMA at CNH6.4014 would shift downside focus to CNH6.3588-81, a price congestion from earlier this month. Bulls need a rebound above yesterday's peak at CNH6.4565 to regain poise before targeting ascending channel top at CNH6.4629.
- Just worth noting that China Securities Journal reported that there is still room for the PBOC to lower Loan Prime Rates in Q2 after keeping them unchanged this month.
Fig. 1: Differential Between USD/CNY Mid-Point Fixing & BBG Survey Estimate
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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