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26 Feb 2015
PBoC to refrain from band widening anytime soon, neutral bias for USD/CNY – BTMU
FXStreet (Barcelona) - Expecting that the PBoC would be unwilling to see spot climb higher than 6.3000, and with less chances of a band widening anytime soon, the Team at Bank of Tokyo-Mitsubishi UFJ maintains a neutral outlook for USD/CNY in the week ahead.
Key Quotes
“We are neutral though much of the market remains bullish ..”
“CNY continues to march to its own piper: Fixing higher, which encourages expectations of higher USD/CNY, which means a daily effort to keep spot below the +2% barrier.”
“But the weakside has shifted higher by about 100pips relative to before the holidays, so if it is move another 100bps higher next week that requires a fix at around the 6.1470ish level.”
“If that should happen we will re-examine whether the Chinese are indeed making another run like 1H14 (that hasn't been our view). But otherwise, there is potential for the fix to fall before February trade figures.”
“We still don't think PBOC wants spot higher than 6.3000 nor that it will widen the band anytime soon.”
“Our view of an economy slowly bottoming would be more supported if the official CFLP PMI corroborates the rebound in the February flash HSBC/Markit manufacturing PMI.”
“USD/CNY – Neutral Bias – (6.2450-6.2650)“
Key Quotes
“We are neutral though much of the market remains bullish ..”
“CNY continues to march to its own piper: Fixing higher, which encourages expectations of higher USD/CNY, which means a daily effort to keep spot below the +2% barrier.”
“But the weakside has shifted higher by about 100pips relative to before the holidays, so if it is move another 100bps higher next week that requires a fix at around the 6.1470ish level.”
“If that should happen we will re-examine whether the Chinese are indeed making another run like 1H14 (that hasn't been our view). But otherwise, there is potential for the fix to fall before February trade figures.”
“We still don't think PBOC wants spot higher than 6.3000 nor that it will widen the band anytime soon.”
“Our view of an economy slowly bottoming would be more supported if the official CFLP PMI corroborates the rebound in the February flash HSBC/Markit manufacturing PMI.”
“USD/CNY – Neutral Bias – (6.2450-6.2650)“