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28 Mar 2013
Forex Flash: USD/CNY looks bearish ahead - BTMU
FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts are bearish on USD/CNY for the week ahead and see spot moving between a range of 6.2075-6.2275.
They begin by noting that the broad hint dropped by a senior PBOC advisor that March CPI inflation could be as slow as 2%YoY does not dissuade them from thinking that later in 2013, in the second half, a stronger currency could be helpful to the cause of catching up in the inflation fight. By this they mean, “If fighting inflation might be one aim of exchange rate policy. But then, who knows? Flash PMIs seem to support our outlook for continued recovery and we'd expect that to sustain next week when final versions come out.” They feel that the main upside risk to USD/CNY is more euro contagion, but so far Cyprus has not been a factor (not even for volatility). If anything, intraday ranges have been even narrower than usual as we head into Easter; or so we've been told, by bored colleagues onshore.
They begin by noting that the broad hint dropped by a senior PBOC advisor that March CPI inflation could be as slow as 2%YoY does not dissuade them from thinking that later in 2013, in the second half, a stronger currency could be helpful to the cause of catching up in the inflation fight. By this they mean, “If fighting inflation might be one aim of exchange rate policy. But then, who knows? Flash PMIs seem to support our outlook for continued recovery and we'd expect that to sustain next week when final versions come out.” They feel that the main upside risk to USD/CNY is more euro contagion, but so far Cyprus has not been a factor (not even for volatility). If anything, intraday ranges have been even narrower than usual as we head into Easter; or so we've been told, by bored colleagues onshore.