CNH: CNY Fixing Much Stronger Than Expected
Aug-25 01:27
The USD/CNY fix printed at 6.8536, versus a market estimate of 6.8656.
- Today's fix was a large downside surprise in USD/CNY terms of -120pips. We have to go back to the start of February 2020 to see a larger downside surprise, see the chart below. The rolling 5-day sum of the error term has slumped back to -151 pips.
- Today's fixing outcome, coupled with the overnight warning to onshore banks against shorting the yuan, is a clear shot across the bow to short CNH positions.
- USD/CNH has fallen back below 6.8600 post the fix, so through the overnight low. We have stabilised somewhat around 6.8550. The next downside target could be 6.8400, lows from the previous session.
Fig 1: USD/CNY Fixing Relative To Market Expectations (USD/CNY terms)
Source: MNI/Market News/Bloomberg
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Historical bullets
CNH: CNY Fixing On the Firm Side
Jul-26 01:22
The USD/CNY fix printed at 6.7483, versus a market estimate of 6.7493.
- Today's fix represents a -10pip downside surprise in USD/CNY terms. This is the first downside surprise since this time last week. The overall size of surprises remains modest though.
- The 5-day rolling sum off error terms is still higher than yesterday to +25pips (versus +14pips), as last Tuesday's -21pip downside surprise dropped out of the metric.
- USD/CNH has edged lower post the fix, with the pair dipping under 6.7500 (last 6.7470). Eyes will be on a revisit to the overnight low just under 6.7450, with broader USD sentiment softer.
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The BoJ offers to buy an unlimited amount of 10-Year JGBs at a fixed rate of 0.25%.
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