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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
By late in the NY session on Thursday USD/CNH sat under 7.1200, just over 1% lower from early Asia Pac highs above 7.1900. The pair currently sits a little higher now, last in the 7.1210/20 region. USD/CNY spot closed at 7.1210, while the CNY NEER (J.P. Morgan index) rose 0.19% to 121.39, the first gain in nearly 2 weeks.
- CNH benefited from the broad USD pullback (particularly EUR strength), but also fresh stimulus hopes. The CSI 300 rose 1.60% yesterday, while North bound stock connect flows were strong. In US Thursday trade, the Golden Dragon index rose over 2% for the 3rd straight session.
- The WSJ ran an article on stimulus plans (see this link), whilst there is also speculation a State Council meeting could take place today in China.
- USD/CNH risk reversals continue to trend sharply lower, down close to par in the 1 month space, see the chart below. There has been very little upside in risk reversals in this trend move higher in USD/CNH.
- The data calendar is now empty until next Tues, when 5yr and 1yr LPR rates are expected to be cut (by 10bps each).
- Stimulus discussions will remain a focus point, while US Secretary of State Blinken leaves for his 2-day trip to China today.
Fig 1: USD/CNH & 1 Month Risk Reversals
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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