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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 traded above 7.0900 post the Asia close, although the pair ran into some resistance ahead of 7.0950. We sit slightly lower now, tracking just above 7.0900. CNH lost 0.35% for Thursday's session, which was broadly in line with dollar index gains. Technically, the top of the bull channel that is drawn from the Feb 2 low (around 7.1435), presents the next level of meaningful resistance. The CNY NEER (J.P. Morgan index) was flat, last at 123.67.
- In Thursday US trade, the Golden Dragon index lost 2.18%, the third straight session of losses greater than 2%. The index is now back to late Nov 2022 lows.
- To recap onshore equities fell yesterday, the CSI 300 down 0.2%, but the index finished above session lows. Still, we saw accelerated Northbound stock connect outflows late yesterday. We finished at -9.6bn yuan, bringing net outflows for the past 3 sessions to -22bn yuan.
- Outside of equity/outflow headwinds we continue to see yield differentials trending sharply back in favor of the USD. The chart below overlays USD/CNH versus the US-CH 2yr government bond yield spread.
- The latest Bloomberg consensus survey for China showed economists trimming their 2023 growth forecast to 5.5%, from 5.6%. A RRR cut is also expected in Q3 (see this link)
Fig 1: USD/CNH Versus US-CH 2yr 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.
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