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9 Jan 2015
Sell USD/CNH rallies ahead next week's trade data – Westpac
FXStreet (Barcelona) - Jonathan Cavenagh of Westpac, looks to fade bounces in the pair ahead of next week's data print, explaining that the pair has shown a tendency to fall in and around the release of trade data.
Key Quotes
“Today's USD/CNY fix caught our attention. The fix was only lowered by 6 points but this went against our model prediction, which looked for a +23 point rise in the fix. Our fixing model looked for a higher fix due to a weaker EUR and JPY trend over the past 24 hours. The difference between the actual fix and that predicted by the model is not that large but it is worth noting in our view, particularly ahead of next Tuesday's trade data.”
“China's trade surplus has risen strongly over this period, which has reflected a combination of weaker domestic demand (which has lowered import growth), some recovery in export growth and more recently the slump in commodity prices."
"There has been a tendency for the USD/CNY fixing rate to fall sharply in and around the release of the trade data. Indeed, in the past 6 months the fix has dropped by an average of 203 points in the period that coincides with the release of the trade data.”
Key Quotes
“Today's USD/CNY fix caught our attention. The fix was only lowered by 6 points but this went against our model prediction, which looked for a +23 point rise in the fix. Our fixing model looked for a higher fix due to a weaker EUR and JPY trend over the past 24 hours. The difference between the actual fix and that predicted by the model is not that large but it is worth noting in our view, particularly ahead of next Tuesday's trade data.”
“China's trade surplus has risen strongly over this period, which has reflected a combination of weaker domestic demand (which has lowered import growth), some recovery in export growth and more recently the slump in commodity prices."
"There has been a tendency for the USD/CNY fixing rate to fall sharply in and around the release of the trade data. Indeed, in the past 6 months the fix has dropped by an average of 203 points in the period that coincides with the release of the trade data.”