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CNH
USD/CNH touched a fresh high of 7.0530, before selling interest emerged. The pair was last around 7.0495/00. Beyond these levels is the July 6 2020 high of 7.0690.
- Today's move appears to have been more onshore spot led. USD/CNY onshore is up by 0.34% since the open (to 7.0430), outpacing USD/CNH gains (+0.25% since the NY close).
- We have seen the USD/CNH - USD/CNY spread compress, see the chart below. This metric is well down on from earlier highs over the past month.
- If onshore spot stays elevated into the 4:30pm close today (which feeds into tomorrow's fixing estimate) it will bias those estimates higher.
- The authorities can still deliver the actual fixing much lower, but the recent trend in the USD/CNY fix has still been skewed to the upside (6.9536 today was a fresh cyclical high back to 2020).
- Current spot levels (if maintained) are around recent wides relative to today's fix (nearly +900pips).
Fig 1: USD/CNH - USD/CNY Spread Compresses
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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