The CNY fix printed slightly stronger than expected. The market expected the USD/CNY fix at 6.7493, while the actual came in at 6.7487.
- Once again today's fix delivered only a modest surprise, -6pips in USD/CNY terms. This contrasts with yesterday's -15pip surprise. For the week, the cumulative downside surprise is a very modest -11pips.
- This contrasts with last week's cumulative -174pips in downside surprises. The rolling 5 day sum of the USD/CNY fixing error term troughed at -186pips back on May 9th, see the chart below.
- Hence, on a short term basis, we are almost back to neutral from a fixing bias standpoint. In this sense the authorities have not been trying to encourage further USD/CNY weakness this past week, at least beyond the broader USD trend.
- The market reaction in USD/CNH was muted post the fix. We did rise above 6.7400 after the 5-yr LPR cut was announced (4.45% versus 4.60% previously). However, we are now back to 6.7350.
Fig 1: CNY Fixing Bias Almost Back to Neutral - 5 Day Rolling Sum Of Fixing Error
Source: MNI - Market News/Bloomberg