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CNY Fixing On the Firmer Side

CNH

The USD/CNY fix printed at 6.8388, versus a market estimate of 6.8425.

  • Today's fix was a downside surprise in USD/CNY terms of -37pips. This brings the 5-day rolling sum of the error term to -35pips, from -12 pips yesterday, so back to a modest lean against CNY depreciation pressures on this metric.
  • Also note today’s outcome is the largest downside surprise, relative to expectations, since late May of this year.
  • USD/CNH has dipped slightly following the fix. The pair is back below 6.8600, but remains very much within recent ranges. We got close to 6.8550, but some support is evident around this level (last at 6.8590).
  • Recall earlier today the front page of the Securities Journal stated that the widening policy differential with the US was unlikely to hurt the yuan too much, and that a weaker local currency was good for export competitiveness.
  • This, along with a stronger USD against the majors, helped push USD/CNH higher in the lead up to the fixing (session highs just shy of 6.8680).

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