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11 Mar 2014
Flash: CNY weakness dominates again - BMO Capital Markets
FXStreet (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets notes that USD/CNY traded as little as about 60 pips below the PBoC’s upper 1.0% band overnight, as CNY weakness dominated again.
Key Quotes
“The move up in the pair generally seemed to be driven by enormous PBoC intervention flow, despite the lower mid-point fix, although we suspect speculative short squeezes in USDCNY and the unwind of structures biased towards a stronger CNY are becoming a bigger upside force for the pair as well.”
“Two interesting things have emerged which bear watching in the week ahead. The first is the potential recycling of PBoC intervention flows into various G10 currencies other than the USD. The second is the fact that the offshore and onshore CNY forward curves have not steepened up aggressively, despite the sharp fall in the CNY.”
Key Quotes
“The move up in the pair generally seemed to be driven by enormous PBoC intervention flow, despite the lower mid-point fix, although we suspect speculative short squeezes in USDCNY and the unwind of structures biased towards a stronger CNY are becoming a bigger upside force for the pair as well.”
“Two interesting things have emerged which bear watching in the week ahead. The first is the potential recycling of PBoC intervention flows into various G10 currencies other than the USD. The second is the fact that the offshore and onshore CNY forward curves have not steepened up aggressively, despite the sharp fall in the CNY.”