USD/CNY to trade with neutral bias within the range of 6.5600-6.600 – MUFG

By FXStreet FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, suggests that as they had expected (but not markets) December saw a huge reserves loss for China, bigger than August’s.

Key Quotes

“Maybe that accounted for higher fixings this first week of the year, to let off some steam and slow reserve losses. But today’s CFETS statement may be a first salvo to hold the line next week and stabilize the currency. It’s too early to expect retracement because onshore corporates, among others, are so spooked.”

“Beyond next week exchange rate management still looks suspect as authorities tilt at speculators: i) the CNH-CNY basis is cause for USD/CNY’s rise; ii) therefore focus on the offshore market because that’s where speculators lie.”
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Source:: FX Street