Chinese Yuan: Depressed positioning offers re-entry – BNY

FXStreet Insights Team FXStreet

BNY’s Geoff Yu stresses that Chinese equities and Chinese Yuan (CNY) remain heavily under-owned versus APAC (Asia-Pacific) peers, with cross-border holdings at very low levels. While fundamentals are still not compelling, he argues that retail flows, a base in ownership and rising stimulus talk mean that any stabilization in data or credible policy support could trigger a meaningful rebuild in exposure to China.

China de-risked across asset classes

"CNY is also the worst-held APAC currency, yet flows are no longer showing aggressive selling."

"China has effectively been de-risked across equities, FX and fixed income."

"The fundamental case is not yet clean: data, earnings and policy follow-through still need to improve."

"But the positioning setup is becoming more compelling."

"If fundamentals stabilize or credible policy support emerges, even a modest rebuild in exposure to China could create a meaningful re-entry opportunity from very depressed ownership levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD dips below 1.3350 with bullish momentum losing steam

The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair trades near 1.3340 at the time of writing, down from 1.3387 highs last week, although it maintains a near-term bullish trend intact.

EUR/USD clings to daily gains, still below 1.1450

EUR/USD manages to shrug off the initial bearish tone and advances toward the 1.1440-1.1450 band on Monday, up modestly for the day. Meanwhile, the pair’s mild gains comes on the back of the lack of clear direction in the Greenback in quite an apathetic start to the week.

Gold remains offered below $4,200

Gold comes under fresh downside pressure on Monday, reversing three daily upticks in a row and meeting some initial resistance around the $4,200 mark per troy ounce. Safe-haven demand has shifted toward the US Dollar as renewed tensions surrounding the Strait of Hormuz weigh on market sentiment, limiting the precious metal's upside.

XRP extends decline as risk-off sentiment, fading retail demand weigh

Ripple (XRP) sustains losses on Monday, edging lower toward the short-term $1.10 support. XRP failed to sustain momentum above $1.20 on the previous day, prompting profit-taking amid a broader crypto market drawdown attributed to mild inflows into related digital investment products, declining retail participation and macroeconomic uncertainty.

The US Dollar just beat the Swiss Franc at its own safe-haven game

As the king among safe havens, the Swiss Franc is supposed to benefit from geopolitical shocks such as the Iran war. This time, it didn’t. The Swissie is nearly 6% below January’s peak against the USD after a sharp decline that came along with the war in Iran and the closure of the Strait of Hormuz.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.