USD/CNY: Neutral bias for the week ahead – MUFG

Lee Hardman, Currency Analyst at MUFG, notes that as usual this time of year, given next week's week-ahead range of 6.8000-6.9000 exactly coincides with China's onshore financial market holiday, there is little to do but indicate a neutral bias.

Key Quotes

“Our last week-ahead range did prove more useful for CNH than CNY, possibly due to lingering corporate flows. This week news has finally exploded that authorities are, indeed, seeking to clamp down on RMB denominated remittances offshore. Flows once tolerated by Premier Li Keqiang as "ants coming home" - well, apparently the ants are no longer free to leave. Initially we always expect new Chinese capital controls to work, due to the surprise factor, and fewer offshore remittances in RMB may continue the thinning out of the need to buy USD/CNH in Hong Kong initially.”