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8 Feb 2013
Forex Flash: USD/CNY looks neutral ahead – BTMU
Bank of Tokyo Mitsubishi UFJ analysts have taken a look at USD/CNY´s prospects and are neutral for the week ahead, with a range between 6.2100-6.2500.
They note that progressively higher onshore fixings easily pulled up USD/CNY spot in the last trading week before the holidays, to break their topside range for last week. In a week ahead when USD/CNY will not trade at all onshore, it's easy to have a "neutral" outlook. They feel that official efforts have been directed towards lower short rates and higher USD/CNY, but it seems a bit like manufactured weakening. Logically a more cautious monetary policy ahead could see less injections of liquidity, but this remains to be seen. They write, “Offshore, USD/CNH still feels a bit heavy at times. The wider onshore fix and offshore spot diverge, the more interesting the prospects for future capital flows.”
They note that progressively higher onshore fixings easily pulled up USD/CNY spot in the last trading week before the holidays, to break their topside range for last week. In a week ahead when USD/CNY will not trade at all onshore, it's easy to have a "neutral" outlook. They feel that official efforts have been directed towards lower short rates and higher USD/CNY, but it seems a bit like manufactured weakening. Logically a more cautious monetary policy ahead could see less injections of liquidity, but this remains to be seen. They write, “Offshore, USD/CNH still feels a bit heavy at times. The wider onshore fix and offshore spot diverge, the more interesting the prospects for future capital flows.”