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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 support emerged ahead of 7.2450 on Friday, comfortably off earlier risk aversion induced highs near 7.2630. We track near 7.2510 in early Monday trade, after finishing Friday's session close to unchanged. USD/CNY ended just under 7.2400. CNH made up some ground against the USD last week, while onshore spot lost a touch of ground, albeit amid tight ranges, with moves above 7.2400 in onshore spot unable to be sustained.
- Tighter CNH liquidity was a support point last week, the overnight CNH deposit rate in Hong Kong up to 6.13% on Friday, just shy of recent highs. The 1 week implied CNH rate was near 5.40%, also close to cyclical highs back to August last year. This is helping keep USD/CNH well behaved despite the recent spike up in the broader USD index (see the chart below)
- Still, the USD/CNY fixing crept higher and at 7.1046 is at highs back to the start of March. Early focus this week may be on whether USD/CNY spot can push above 7.2400 and hold above this level.
- On the data front today we have the 5yr and 1yr LPR's No change is expected, with the 5yr currently at 3.95%, the 1yr at 3.45%. PBoC commentary from last week cautioned against excessively low interest rates.
- US Secretary of State Blinken visits China this week, where China-Russia links could reportedly be a focus point.
- US-China relations are likely to remain in focus, particularly in the lead up to the US Presidential election later this year. Last week US President Biden proposed tariffs on certain China steel and aluminium products.
Fig 1: USD/CNH Versus BBDXY Index Trend
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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