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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 turned bid in early trade, running as high as to CNH6.7618, before pulling back after the release of China's above-forecast inflation figures. The rate last deals at CNH6.7375, some 100 pips lower on the day.
- China's inflation figures topped expectations. Consumer prices rose 2.1% Y/Y in April, printing above BBG median estimate of +1.8% and above the forecast range of +1.2%-2.0%. Factory-gate price growth slowed to +8.0% from +8.3%, beating consensus forecast of +7.8%.
- As flagged in our preview bullet, the data should not fundamentally alter the PBOC's easy policy bias, as China's prolonged fight against renewed outbreak of Covid-19 is taking its toll on domestic economy.
- Scientists from Shanghai's Fudan University published a peer-reviewed study suggesting that China would face a "tsunami" of infections if it abandons its Covid-Zero strategy, owing to low vaccinations rates among the elderly and reliance on domestic jabs with poor efficacy.
- From a technical point of view, bears keep an eye on the resistance-turned-support located at CNH6.7000, which capped gains on May 3 & May 5, before limiting losses on May 9. Further below, focus is on May 4 trough at CNH6.118. Conversely, bulls need a clearance of May 9 high of CNH6.7766 before targeting Nov 4, 2020 high of CNH6.7745.
Fig. 1: China CPI Y/Y vs. PPI Y/Y
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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