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Eyes On USD/CNY Fix Post China Holiday

CNH

With China onshore markets closed yesterday, USD/CNH followed broader USD gyrations. The pair currently sits just under 6.9200, we had a number of attempts overnight to break below 6.9100 but couldn't do so. EUR/USD faltered closer to 1.02, which may have helped curb yuan gains. It's possible the 1 yr MLF decision prints today (due any time between now and Friday), with the market expecting no change at 2.75%. Otherwise, some focus will also rest with the CNY fixing, the first since last Friday.

  • From a fixing standpoint, recall last week the fixing error nearly doubled to -1516pips (in USD/CNY terms), with Wednesday's outcome the largest downside surprise since Bloomberg started compiling consensus estimates in 2018.
  • The authorities are likely to be relieved to some degree, given USD/CNH has moved away from 7.00, although a fixing outcome closer to market expectations today may re-energize USD bulls.
  • CNH continues to outperform UST yield gains, although this is also evident for the majors to some extent since the start of this week.
  • China Premier Li Keqiang stated, at a state council meeting, that growth will be kept in a reasonable range. Multiple measures should be used to support growth, particularly consumption. There didn't appear any fresh hints though around new stimulus measures from the meeting. Keeping growth in a reasonable range has been mentioned on several occasions previously.
  • China President Xi Jinping will also make his first overseas trip since the start of pandemic, when he visits Kazakhstan and Uzbekistan this week.
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EM BulletFixed Income BulletsHomepagemarkets-real-timeCommoditiesBulletMarketsEmerging Markets NewsForeign Exchange Bullets

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