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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.
CHINA
- In the past week, business sentiment has started to pick up in China following the positive headlines on China ‘declaring victory’ on Covid.
- Economic data overnight showed that PMI surveys bounced back above the 50-line threshold, with non-manufacturing PMI smashing expectations by surging to 54.7 in June (vs. 50.5 exp.).
- Hence, we recently argued that the recovery in soft data in China could lead to further strength in domestic risky assets and CNY in the short term.
- The technical chart on USDCNY shows the formation of a ‘bear’ retracement; the pair has been reaching lower highs in recent weeks after hitting a local high at 6.8125 in mid-May and has been oscillating around the 6.70 level in the past two weeks.
- The dynamics of the CNH also shows that the selling pressure has eased in the offshore market with the compression of CNH-CNY spreads.
- First support to watch on the downside stands at 6.6650 (50DMA), followed by 6.64, which corresponds to the 38.2% Fibo retracement of the 6.307 – 7.178 range (rejected in the beginning of the month).
- On the topside, resistance to watch stands at 6.73 (downward trending resistance line).
- Major risk of CNY remains the macro picture (geopolitical uncertainty and stagflation fears) and the negative China 10Y bond yield premium (still in deep negative territory).
Source: 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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