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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.
CNH
Along with other majors, USD/CNH was volatile post the Asia close, dipping sub 7.1500 post the US CPI print, before ultimately making fresh highs close to 7.1800 late in the NY session. We sit around 7.1730 currently, with CNH having lost 0.26% for Tuesday's session, underperforming weaker USD indices (DXY -0.34%). USD/CNY finished up at 7.1662, while the CNY NEER (J.P. Morgan index) slumped a further 0.46% to 121.23.
- China also announcing late yesterday a 10bps cut to the overnight, 7-day and 1-month standing lending facility (SLF), in addition to the 10bps repo cut announced yesterday. Bloomberg also reported China is also considering a broader stimulus package to boost growth, which may be discussed by the State Council this Friday (see this link).
- May aggregate credit/new lending figures rose versus Apr levels, but still fell short of expectations, likely reinforcing the need for policy stimulus. The consensus is now for a 10bps cut in tomorrow's 1yr MLF rate (see this piece from the MNI policy team).
- Stimulus hopes may aid China equities/hopes of a growth rebound. The CSI 300 closed 0.53% higher yesterday.
- This has the potential to support the yuan, but for USD/CNH we are also mindful of the continued move higher in US-CH yield differentials, which are closing in on cyclical highs, see the chart below.
Fig 1: USD/CNH & US-CH 2yr Government Bond Yield Spreads
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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