CNH: USD/CNH Steady During Holiday Period, Consensus Remains For Firmer Yuan
Oct-02 01:25
USD/CNH tracks near 7.1300 in latest dealings, remaining close to recent lows. A reminder that China markets are out until next Thursday (the 9th of Oct), for National Day celebrations. Hong Kong markets return after yesterday's break, which will aid CNH liquidity, but we be without an onshore CY anchor point until next Thursday.
- Current USD/CNH levels rest near the 20-day EMA point, while recent lows from end Sep were at 7.1187. greater focus is likely to rest with a test back under 7.1000, with earlier Sep lows at 7.0851. On the topside, recent highs were around the 50-day EMA resistance point at 7.1455/60.
- 1 month implied vols remain quite depressed last around 2.60%, just up cycle lows. The holiday period plus the tendency for CNH to retain a modest beta with respect to broader USD moves is helping keep implied vols low.
- The 1 month risk reversal is around -0.44, slightly up from recent lows sub -0.50. Since early March puts in USD/CNH have been favored over calls for the pair.
- The BBG consensus for USD/CNY for end 2025 is 7.10, before falling sequentially to 7.00 by end 2026.
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CHINA: Central Bank Withdraws CNY150.1bn via OMO
Sep-02 01:24
- The PBOC issued CNY255.7bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY405.8bn.
- Net liquidity withdraws CNY150.1bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.41%, from prior close of 1.44%.
- The China overnight interbank repo rate is at 1.32%, from the prior close of 1.25%.
- The China 7-day interbank repo rate is at 1.41%, from the prior close of 1.45%.
MNI: CHINA PBOC CONDUCTS CNY255.7 BLN VIA 7-DAY REVERSE REPO TUES
Sep-02 01:22
- CHINA PBOC CONDUCTS CNY255.7 BLN VIA 7-DAY REVERSE REPO TUES
CNH: USD/CNY Fixing Edges Higher, Fixing Error Unchanged
Sep-02 01:18
The USD/CNY fix printed at 7.1089, versus a BBG market consensus of 7.1335.
- The fixing continued to edge higher, in line with higher market estimates (relative to Monday's outcome). The fixing error was basically unchanged at -246pips.
- USD/CNH is tracking a touch higher in early Tuesday dealings, last near 7.1360.
- The recent rebound in the USD/CNY fixing comes without much shift in broader USD trends, which may be driving some short covering on USD/CNH.
