An Ever So Slightly Market Friendly CNY Fix

Published 08/06/2019, 04:16 AM
Updated 07/09/2023, 06:31 AM
USD/CNY
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USD/CNH
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The Yuan

A more market-friendly China fix provided the first signal that the Pboc is having a second thought about weaponising the Yuan However, the Fix is ambiguous enough to keep two-sided interest alive while still conveying a message to US trade hawks that in no uncertain terms will China be a pushover if trade talks ever resume.

Oil

There was a small lift in risk assets due to the more risk-friendly CNY Fix, but this is a more likely a correction from over oversold doom and gloom positions. But with commodity markets in total disarray, this move should not be confused with a "risk-on" especially in Oil markets as the latest trade war escalation is flat out harmful to global growth and by extension for oil markets.

The commodity bears are overseeing proceedings, and any upticks will be viewed as selling opportunities. Anyone holding stale WTI longs is praying for a significant drop in the API inventory survey to unwind underwater positions. The only concerns for commodity traders who usually keep things simple are the escalation in US-China tensions that will hurt China growth and weigh on oil and other commodity prices.

Indeed, it's going to be a long and dangerous week on the RMB train as there's a multitude of reasons that could derail sentiment yet again.

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