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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 hit fresh highs post the Asia close, getting close to 7.1450, before pulling back to ~7.1300, which is where we stayed close to for the rest of the NY session. CNH lost 0.14% for Tuesday's session, while onshore USD/CNY spot closed at 7.1176. The CNY NEER (J.P. Morgan Index) fell further to 122.52, a -0.16% loss for the session.
- Late yesterday there was a lot of focus on deposit cut speculation by the major banks (see this link for more details). Insofar as this biases China interest rates lower, as the authorities seek to boost economic activity, this has scope to weigh on CNH all else equal. The chart below overlays USD/CNH against the US-CH 2yr government bond differential. The spread is back to mid-March levels.
- The China 2yr bond yield is back to the 2.05/2.10% region, levels last seen in Nov 2022. The 10yr is yet to move sub 2.70% though, which has marked recent lows.
- Today we have May trade data, with export growth expected to slow, see this link for more details. The trade surplus is expected to remain very healthy though.
- In the equity space, onshore equities finished weaker for Tuesday, the CSI 300 down -0.94% and back close to the 3800 level. In Tuesday US trade, the Golden Dragon Index rose nearly 3.8%. Bloomberg reported that US Secretary of State Blinken may visit China in coming weeks (see this link).
Fig 1: USD/CNH Versus US-CH 2yr Government Bond Yield Differential
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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