• We add New York to our RGI, reflecting rising Renminbi payment flows and CNH FX turnover
• New York enjoys time-zone advantage, massive trade with China, and rising investor interest in the RMB
• We summarise the latest Renminbi developments in...
Top 3 data/events
• China – Manufacturing PMI is on a weakening trend
• Japan – Q2 Tankan survey is likely to show continued improvement
• NZD – Revised NZD-USD forecasts
• Market focus
• EM local markets are likely to consolidate near-ter...
USD-CNH forwards edge up on spot rebound and broad US dollar strength, favouring our USD long
• Retreat in CNY’s trade-weighted value on the JPY rebound moderates case for higher USD-CNY fixes
• Selling USD-CNY NDF 5M against our existing USD...
The dollar’s broad-based advance has triggered powerful gains in the CNY’s trade-weighted value
• China activity data remains lacklustre, undermining the case for further near-term CNY gains versus USD
• Long USD in USD-CNH 6M forward would benef...
• Broader US dollar strength may trigger a short-lived rebound in the PBoC’s USD-CNY daily fixes
• A shift in the demand-supply balance in the mainland FX market may lift USD-CNY spot
• Going forward, we look for opportunities to establish forward...
• SAFE created a new mechanism to regulate bank NOPs by linking bank FX LDR ratios with the NOP floor
• The aggregate necessary increase in NOP is estimated at USD 23bn, a relatively small amount in our view
• Stricter scrutiny of trade invoices ...
• USD-CNY demand/supply was heavily in favour of sales in Q1, but should be more balanced in Q2
• More balanced demand/supply and new SAFE rules increase the chance of band widening
• We see a 33% chance of CNY band widening before the July SED, o...
China trade and activity data is reinforcing the case for new, mild CNY appreciation
• USD-CNY fix and spot should compress at some point, while the NDF curve is very flat
• Investors should sell USD in the 6M USD-CNY NDF...
Easing of CNH liquidity conditions has stalled, underpinning CNH and CNY slope spreads
• Negative momentum in USD-CNY and USD-CNH forwards is dissipating on slower corporate flows
• We close the USD-CNY NDF 1x12M spread trade established on 16...
Stabilising growth outlook, ample liquidity to trigger multi-quarter slide in USD-AXJ and USD-CNY NDFs
• Choppy risk appetite and broader policy trade-offs create context for near-term bounce in USD-CNY fix
• We roll maturing short USD-CNY 12M-1...
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The world economy is in transition. Global growth rates are picking up, but transition means elevated risks and volatility.
In terms of global implications, all eyes will be on the US and China, with the US normalising monetary policy and China rebalancing its economy.
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