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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 pulled back sharply post the US CPI print, but this proved short-lived. From lows just under 6.9170 we rebounded to fresh highs above 6.9400, getting close to 6.9425 by late NY trade. We currently track in the 6.9370/80 region. CNH lost 0.20% for Wednesday's session, despite a -0.26% pull back in the BBDXY. The CNY NEER (J.P. Morgan index) fell -0.37% to 124.04, fresh lows back to late Nov 2022.
- The chart below overlays USD/CNH against the BBDXY index, with CNH underperforming the softer USD trend in recent months, hence the NEER falling to multi-month lows.
- One factor which weighed on CNH sentiment late yesterday was Reuters reports of "big four state-owned banks to cut deposit rate ceiling on some products." The regulator's appeal mimics action taken in April, and should support domestic liquidity, while protecting net interest margins among the Chinese banking sector.
- The aim may also to be to encourage consumers to reduce savings and spend more. At the margin, lower deposit rates may be seen as a China currency headwind.
- Today, we get Apr inflation data, CPI is expected at 0.3% y/y, versus 0.7% prior. PPI is expected at -3.3%y/y from -2.5% prior.
- Also note US President Biden stated a call with China President Xi Jinping is in the works.
Fig 1: CNH Underperforming Weaker BBDXY Trend
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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