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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
USD/CNH ran into resistance ahead of 6.9060 on two occasions during Friday's session, before ending the session just under 6.9000, losing 0.21% in CNH terms. We track around 6.8975 currently. The CNY NEER edged down slightly on Friday, -0.06% to 125.32 (J.P. Morgan Index).
- USD/CNH continues to respect recent ranges, albeit with a slight upside bias. Bulls will target a re-test of the 6.9100 level. On the downside we have the 20 and 50-day EMAs close to 6.8850, but we may need to break the 200-day day at 6.8737 to turn the tide more constructive for CNH. The data calendar is quiet until Thursday's industrial profits print.
- We may see some focus on the equity backdrop. The CSI 300 lost close to 2% on Friday, now not too far off the 200-day MA. Friday saw a chunky 7.62bn yuan in northbound outflows.
- In Friday US trade, the Golden Dragon index continued to lost ground, down a further 1.76%. Focus remains on potential further US investment curbs, while over the weekend President Xi actively encouraged companies to break technological barriers.
- China equities are underperforming the rest of the world trend, see the chart below. USD/CNH, which is inverted on the chart below has had a reasonable relationship with this ratio over the past 12 months. Current levels point to CNH headwinds in the near term.
Fig 1: USD/CNH (Inverted) Versus China To Global 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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