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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.
CNH
USD/CNH has been more range bound through today's session, unable to make new lows (7.0293 today versus just under 7.02 yesterday). Upside gains have also been limited though, with selling interest emerging above 7.0600. Softer activity data outcomes haven't helped sentiment, although follow through pressures have been limited. The USD is finding some support against the majors (most notably JPY) as US yields have stabilized, which could also be generating some stability in USD/CNH.
- The chart below overlays USD/CNH against the 2yr US-CH government bond differential. The two series don't move one for one, particularly over the longer term, but CNH has outperformed the rate differential recently.
Fig 1: USD/CNH & US-CH 2yr Yield Differential
Source: MNI - Market News/Bloomberg
- A positive offset for CNH comes via the recent outperformance of China related equities. The second chart below overlays USD/CNH (inverted on the chart) against the ratio of China to global equities (MSCI basis).
- Further outperformance of equity plays may be needed to drive a further recovery in China FX, particularly as it may take time for evidence to emerge that recent policy shifts (around CZS and the property sector) are gaining traction in the economy. The next round of PMI survey prints are not due until the end of the month.
Fig 2: USD/CNH (Inverted) Against China/World Equity Ratio
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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