According to analysts at TD Securities, the moves in USDCNY and USDCNH are catching the headlines again after breaking the technically and psychologically important 6.70 level.
Key Quotes
“Recent USDCNY fixings are not significantly out of line with previous day’s closes (below one standard deviation). CNY has now dropped by 3% this year versus USD ytd and in trade weighted terms (CFETS) it is at its lowest since mid-January.”
“It’s worth noting that the USD index has strengthened by almost exactly the same magnitude year to date. However, the low correlation between the USD index and CNY and weakening CFETS index suggests that China is allowing relative weakness in CNY. In response comments by PBoC Deputy Governor Pan noted “ample” FX reserves and confidence in keeping the CNY “stable in reasonable range”.”
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