FXStreet (Delhi) – Research Team at MUFG, suggests that the CNH intervention done ahead of SDR adoption (possibly fearing bids) doesn’t appear to have taken and the bullish bias for the pair is likely to prevail in the near term with trading range between 6.3600-6.4100.
Key Quotes
“Post-SDR pledges by Chinese monetary officials seem inconsistent, in that they can’t be met without intervention, which remains a risk even though the bias remains to the upside. We had a couple of huge volume days onshore with the daily range at something like 19pips. Mother is on the case.”
“USD/HKD is back at its floor suggesting capital is still flowing out. November reserves will likely be a fudge because forwards have not been revealed – despite its SDDS pledge, in its first report China refused to reveal foreign liquidity details. The next set of Chinese exports should show at least that the second derivative is not negative (ie, the decline is not accelerating), but sluggish CPI inflation will continue to connote overcapacity and while lending #s may rise, they don’t matter if sums are going out to pay interest.”
(Market News Provided by FXstreet)