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24 Feb 2014
Flash: USD/CNY trading band to widen - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, commented that analysts expect the USD/CNY trading band to weaken in the near term.
Key Quotes
"The yen has strengthened modestly in the Asian trading session supported by lingering investor concerns over the outlook for the Chinese economy. The Shanghai Composite equity index has declined by around 1.8% overnight following a report from Shanghai Securities that Industrial Bank Co. has suspended loans to some property developers and tightened lending to real estate related industries including steel and cement.
"It was also revealed overnight that new house price growth slowed in January highlighting that policy measures to dampen house price growth appear to be having some modest restraining impact. New house prices in China’s 70 biggest cities still increased by annual rate of 9.6% in January although slowed modestly from an annual rate of 9.9% in December 2013."
"The weakening of the Chinese yuan over the past week with USD/CNY rising back towards the daily fixing point is also attracting more market attention. Our analysts in Hong Kong expect that the Chinese authorities will soon act to widen the USD/CNY’s daily trading band rather than viewing the yuan’s decline as resulting from economic weakness in China."
"Chinese Finance Minister Lou Jiwei also played down the yuan’s recent decline noting that its movement is “within the normal range” and doesn’t indicate a change in economic fundamentals. The People’s Bank of China Governor Zhou Xiaochuan also attempted to downplay investor concerns over the economic growth outlook stating that there’s “no big problem” for China to maintain steady and healthy real GDP growth of between 7% and 8%."
Key Quotes
"The yen has strengthened modestly in the Asian trading session supported by lingering investor concerns over the outlook for the Chinese economy. The Shanghai Composite equity index has declined by around 1.8% overnight following a report from Shanghai Securities that Industrial Bank Co. has suspended loans to some property developers and tightened lending to real estate related industries including steel and cement.
"It was also revealed overnight that new house price growth slowed in January highlighting that policy measures to dampen house price growth appear to be having some modest restraining impact. New house prices in China’s 70 biggest cities still increased by annual rate of 9.6% in January although slowed modestly from an annual rate of 9.9% in December 2013."
"The weakening of the Chinese yuan over the past week with USD/CNY rising back towards the daily fixing point is also attracting more market attention. Our analysts in Hong Kong expect that the Chinese authorities will soon act to widen the USD/CNY’s daily trading band rather than viewing the yuan’s decline as resulting from economic weakness in China."
"Chinese Finance Minister Lou Jiwei also played down the yuan’s recent decline noting that its movement is “within the normal range” and doesn’t indicate a change in economic fundamentals. The People’s Bank of China Governor Zhou Xiaochuan also attempted to downplay investor concerns over the economic growth outlook stating that there’s “no big problem” for China to maintain steady and healthy real GDP growth of between 7% and 8%."