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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 reached a high of 6.7899 (BBG), which is close to recent resistance around 6.7900 seen this week. We have stabilized somewhat now, back to the low 6.7800 region. The broader risk tone is slightly softer, with Hong Kong shares lower, led by tech, although losses are being pared at the time of writing. Weakness in the Golden Dragon index, off nearly 6% in the past two sessions not helping at the margins.
- Northbound equity flows are more moderate, so far today, under 2bn yuan. The past month has seen over 105bn yuan in inflows, so we may be consolidating somewhat. The CSI 300 rally has stalled after the ~3% rally through Friday/Monday.
- Tomorrow will also be the last trading session for onshore markets ahead of the LNY break next week, so again that may helping drive position squaring in USD/CNH to some degree.
- January tends to the strongest seasonal month of the year for CNH, with average gains of 0.64% against the USD going back to 2011, see the chart below. It is has risen in 8 out of 13 January's over this period (assuming we maintain the current ~2% gains into month end).
- The seasonality is less positive as we progress further into Q1, although Q2 is the weakest quarter of the year, on average, since 2011.
Fig 1: CNH Seasonality Less Positive As We Progress Beyond January (Sample Since 2011)
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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