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11 Dec 2015
CNY more downside to go? - TDS
FXStreet (Guatemala) - Analysts at TD securities explained that the price action in CNY over the past week has reinforced our bearish medium term view, as policy makers appear increasingly comfortable with renminbi weakness against the USD.
Key Quotes:
"Key fundamental factors underpinning sustained renminbi depreciation include; unfavourable balance of payments dynamics, continued China growth-driven monetary policy divergence with the US through 2016, and the desire to bring the real effective exchange rate back to trend after a period of overly rapid appreciation.
We prefer to play this through CNH shorts, given the higher-beta nature of the currency to CNY, targeting 6.70 in USDCNH (with our risk bias for higher) though short positioning will be subject to increasing but temporary intervention risk at a CNH - CNY gap above 400."
Key Quotes:
"Key fundamental factors underpinning sustained renminbi depreciation include; unfavourable balance of payments dynamics, continued China growth-driven monetary policy divergence with the US through 2016, and the desire to bring the real effective exchange rate back to trend after a period of overly rapid appreciation.
We prefer to play this through CNH shorts, given the higher-beta nature of the currency to CNY, targeting 6.70 in USDCNH (with our risk bias for higher) though short positioning will be subject to increasing but temporary intervention risk at a CNH - CNY gap above 400."