CNY: Stand-out performer against the USD - Westpac

In view of Sean Callow, Research Analyst at Westpac, the past week has seen the US dollar rise against almost all G10 currencies and risk aversion rise, especially around the Korean peninsula and in this context, one currency performance really stands out: the 0.8% rise in CNY.

Key Quotes

“How do we reconcile this with market forces? Not easily. What we certainly cannot miss is the message from the Chinese government that a stable to stronger yuan is a priority, even as export growth disappointed in July.”

“There are conflicting reports about a crackdown on outbound foreign investment but at the very least it looks to be a lot slower than in 2016. This helps cool underlying CNY selling pressure in coming weeks, though the stronger USD/majors we expect in say Nov-Dec should see USD/CNY appreciation resume.”