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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 got close to 7.2700 overnight, but we are back to the 7.2500 region. The pair rebounded 0.90% yesterday, and we are comfortably back above the 20-day EMA (7.2008). The CNY NEER fell 0.52%, based off the J.P. Morgan Index, unwinding all of the previous session’s bounce. The local data calendar is empty today, although FX settlements data is due between now and the end of the month.
- The yield backdrop is less adverse for CNH, see the chart below. The recent loss of momentum in UST yields is notably from a US-CH spread standpoint, which has had a reasonable correlation with USD/CNH in the past 6 months.
- State banks were selling dollars onshore ahead of the 4:30pm close onshore, per Bloomberg reports. This level, which influences the fixing outcome, was 7.2081 on Thursday.
- The Golden Dragon Index lost 3.60% overnight. This came after the recovery in onshore equities stalled yesterday (CSI 300 -0.70%).
- Elsewhere, the US Biden administration is weighing further export controls to China into areas like biotech and AI. This comes after China President Xi stated yesterday it was willing to work with the US to improve exchanges/communication. This comes ahead of a potential meeting between the two leaders at next month's G20 summit (see this link).
Fig 1: USD/CNH & 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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