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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 sits slightly firmer for the session, last near 7.1270. We saw an earlier move above 7.1300, post the higher than forecast USD/CNY fixing, but that move had no follow through. USD/CNY spot is a little higher as well, but there is little basis between onshore and offshore spot at this stage.
- Earlier data showed July industrial profits at 4.1% y/y, versus 3.6% prior. Profit growth is holding up reasonably well, albeit down from H2 2023 levels.
- This goes against the grain of generally softer data outcomes. The Citi China economic surprise index is close to lows going back to September last year.
- The chart below overlays this index against the CNY CFETS basket tracker. Downside data surprises have generally led to CNY basket underperformance in recent months. The latest Bloomberg consensus survey for China showed a slight downtick in 2024 growth expectations to 4.8%, sub the government's 5% target.
- The still challenging growth backdrop suggests yuan weakness on crosses or in basket terms may be the preferred way to play yuan underperformance. Broader USD/CNH trends may be dictated by the Fed outlook.
- Next up on the data front will be official PMI prints for August, out this Saturday.
Fig 1: China Citi Economic Surprise Index Versus CNY CFETS Tracker (BBG)
Source: CITI/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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