USD/CNY: Consolidation in a tight range - MUFG

Sandeep Kanihama FXStreet Contributor

Derek Halpenny, European Head of GMR at MUFG, notes that the risk appetite returned this week and most USD/EM Asia have already returned to pre-Brexit levels, apart from RMB, PHP and SGD.

Key Quotes

“USD/CNY lived in its own world (not so surprisingly) and hovered between 6.68-6.70 over the last forecast period. Traders said onshore RHS flows were much bigger these days but USD/CNY remained capped below 6.70 amidst fear for stage management. USD/CNY's sidewalk should continue for the week ahead; after all the pair did rise all the way from 6.45 level in March.

The removal, or alleviation, of the CNY/CNH basis still tops China's FX to-do list before the redback's SDR basket participation. The entire USD/CNH curve could be under pressure especially the back-end e.g. basis in spot was only 100pips but in 1y stayed wide at 1000pips.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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