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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 extended gains to fresh session highs even as the PBOC set the yuan reference rate 850 pips below the sell-side estimate.
- This brings the current streak of firmer-than-expected fixings on record to 21 consecutive days, the most on record. The bullish bias (as indicated by the 850-pip error term) has also reached a new all-time high.
- Setting the reference rate 850 pips below the expected level may have not been enough to convince the market of the PBOC's resolve, especially that the actual mid-point was fixed at a new cyclical high of CNY6.9798.
- The fixing comes on the heels of Wednesday's FOMC monetary policy review, which saw U.S. policymakers raise interest rates by 75bp and reaffirm their intentions to keep tightening monetary conditions aggressively.
- Broad-based demand for the greenback has facilitated the upswing in USD/CNH this morning, with the pair last seen +188 pips at CNH7.0940.
- Should the rate cross above the CNH7.1000 mark, bulls could take aim at key resistance from May 27, 2020/Sep 3, 2019 highs of CNH7.1965. Bears look for a dip below CNH6.9108, which limited losses on Sep 12.
- China's economic docket is virtually empty during the remainder of the week.
Fig. 1: PBOC Fixing Error (Yuan Reference Rate Less Sell-Side Extimate) vs. USD/CNH
Source: MNI - Market News/Bloomberg
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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