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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 largely tracked sideways through Monday trade. We sit close to 7.2100 in recent dealings, after seeing close to a 60pip range in Monday's session. CNH was little changed versus end Friday levels. Implied vol remains in a downtrend, 1 month near 2.675%, back to levels last seen in May 2017, see the chart below. USD/CNY spot was higher yesterday but remained sub 7.2000. The CNY NEER (J.P. Morgan Index) fell 0.14% to 124.31.
- Volatility may remain low as we progress through the NPC. There is scope for more optimism the other side of this if the authorities make surprise stimulus or growth announcements.
- However, USD/CNY is trading like there is pent up USD demand, and waiting to break above 7.2000, which would likely aid a USD/CNH move higher.
- On the data front today we have the services PMI from Caixin. The market looks for a tick up to 52.9 from 52.7 in Jan.
- In the equity space, the Golden Dragon index slumped nearly 4% in Monday US trade, after modest gains in onshore bourses in Monday trade.
- The decision not to have a briefing by the China Premier post the NPC (which has been in place since 1993) may have weighed on confidence, as the market looks for more information around the authorities plans to support growth this year.
Fig 1: USD/CNH Implied 1 Month Vol Back To 2017 Levels
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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