Free Trial
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 traded to fresh record highs overnight. The pair got close to 7.2750. We currently sit at slightly lower levels, just under 7.2700. The chart below plots USD/CNH against the US-CH 2yr government bond yield spread. The two series continue to move in lock step with each other.
- China 2yr bond yields remain above early September lows but have trended back close to 2% in recent weeks. The 10yr has performed slightly better from a yield stand point (around +10bps off Aug/Sep lows, last at 2.70%).
- Renewed upside in US yields overnight continues to highlight the divergence in monetary policy cycles though.
- Note the 1yr and 5yr LPR rates decisions are scheduled for today, although they may not be released given the on-going Party Congress and delays to other data releases this week. In any case, the market doesn’t expect any change in either rate (1yr LPR currently at 3.65%, the 5yr at 4.30%).
- From a technical standpoint in USD/CNH, 7.2851 is an upside Fibonacci projection, while beyond that is 7.3000, likely round figure resistance.
Fig 1: USD/CNH & US-CH 2yr Government Bond Yield Spread
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.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok