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17 Mar 2014
Flash: USD/CNY focus on 6.20/6.25 - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, believes a breakout of 6.20/25 in USD/CNY could extend the upside.
Key Quotes
"Further East, the PBoC's announcement that they are widening the CNY's daily trading band from 1% to 2%, is not causing Asian risk aversion either. The only currencies in the region which are weaker than they were on Friday are the CNY (-0.3%) and the Yen (-0.2%)."
"The Indonesian Rupiah, is 0.6% stronger against the US dollar and now 7.8% stronger so far this year. The better mood reflects the modest USD/CNY rise, and the natural bias of the market."
"A steady US recovery, lack of new bad news in Europe and range-bound Treasury yields, supports a ‘risk on' yield-hunting mood, threatened only by the geopolitical backdrop. We like being long AUD/NZD, and we remain bullish of USD/JPY as long as 101 holds."
"We will hear more about the CNY market however, because it is clear to me after a week visiting clients in Asia that the long CNY trade is over-populated, with both vanilla and structured trades that look to take advantage of carry and steady appreciation. A break above USD/CNY 6.20/6.25 could well trigger significant covering of positions, another spike in vol, and therefore a lot more column inches in the press."
Key Quotes
"Further East, the PBoC's announcement that they are widening the CNY's daily trading band from 1% to 2%, is not causing Asian risk aversion either. The only currencies in the region which are weaker than they were on Friday are the CNY (-0.3%) and the Yen (-0.2%)."
"The Indonesian Rupiah, is 0.6% stronger against the US dollar and now 7.8% stronger so far this year. The better mood reflects the modest USD/CNY rise, and the natural bias of the market."
"A steady US recovery, lack of new bad news in Europe and range-bound Treasury yields, supports a ‘risk on' yield-hunting mood, threatened only by the geopolitical backdrop. We like being long AUD/NZD, and we remain bullish of USD/JPY as long as 101 holds."
"We will hear more about the CNY market however, because it is clear to me after a week visiting clients in Asia that the long CNY trade is over-populated, with both vanilla and structured trades that look to take advantage of carry and steady appreciation. A break above USD/CNY 6.20/6.25 could well trigger significant covering of positions, another spike in vol, and therefore a lot more column inches in the press."