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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 tracked lower post the Asia close on Tuesday. Lower US yields likely helped at the margin. We got just under 7.2360 in US trade and track near 7.2380 in early Wednesday dealings. USD/CNY spot finished up at 7.2323, so modestly away from recent highs, but still close to the upper daily trading limit (+2% above the UYSD/CNY fixing level). In basket terms the CNY was marginally lower, but remains close to recent highs.
- US-CH yield differentials have moved off recent highs, albeit at the margin. See the chart below, where USD/CNH is plotted against the 2yr and 10yr government bond yield differentials. USD/CNH didn't follow the recent move higher in yield differentials as the authorities continue to guard against yuan depreciation pressures.
- The local bond market rally remains in focus as well given recent comments from the PBoC around monitoring long term interest rates amid the rebound in growth. The next litmus test for local bonds will come tomorrow with the CPI and PPI due for March.
- Today's USD/CNY fixing outcome will remain in focus. Recent outcomes have been steady near the 7.0950 level. For USD/CNH the simple 200-day MA is not too far away at 7.2315. The 20-day EMA is very close to current spot levels.
- In the equity space, the Golden Dragon index rose 1.68% in US trade on Tuesday, following a close to flat outcome for onshore equities yesterday.
Fig 1: USD/CNH Versus US-CH Yield Differentials
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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