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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 got to fresh highs near 6.9250 in NY trade. We sit slightly lower now, last around the 6.9200 region, but we have broken above the simple 200-day MA (6.9091). The CNH was 0.18% weaker for Thursday's session, slightly underperforming broader USD trends. The CNY NEER (J.P. Morgan Index), fell again, now sitting back at 125.69.
- There didn't appear any obvious catalysts for continued CNH weakness, with US yields pulling back etc and USD indices relatively steady.
- We did see fresh weakness in base metals, with copper off by more than 3%. USD/CNH and copper have had some degree of correlation in recent months, see the chart below. Base metals are now back close too unchanged for the year, giving up January gains. Of course, this could reflect headwinds from renewed Fed hawkishness rather than concerns around the strength of the China growth impulse.
- The second chart below is the ratio of China to global equities against USD/CNH (which is inverted on the chart). Again, the relationship is reasonable between the two series, and we may need to see renewed outperformance in the equity space before CNH momentum turns more positive.
- The local data calendar remains quiet today. The potential for shake up of key leadership positions in the financial sector is likely to remain a focus point (see this link for more details).
Fig 1: USD/CNH & Copper
Source: MNI - Market News/Bloomberg
Fig 2: USD/CNH (Inverted) Versus China To Global Equity Ratio
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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