Filter by Categories
China CNY CPI UK

Something for your Espresso: USDCNY is now the global bellwether (again)

The panic will subside if the PBoC manages to defend the 7.30 handle in USDCNY. Could we reach “peak China panic” during today's trading? We look forward to it alongside the FOMC meeting minutes in our morning report.
2023-08-16
<a href="https://stenoresearch.com/author/andreas/" target="_self">Andreas Steno</a>

Andreas Steno

0

The PBoC is now clearly trying to contain pressures in the CNY via a stronger than expected reference rate and USD/CNH has struggled to keep up momentum currently trading around 7.32. The CFETS fixing mid-point for USDCNY remains below 7.20 and judging from the liquidity measures taken by the PBoC, they are trying to tighten market liquidity to force state banks to underpin the CNY (while cutting rates at the same time…)

If USDCNY breaks meaningfully above 7.30, all hell breaks loose in risk assets and commodities, while a successful defense of the threshold will lead to a relief rally.

We see stronger arguments for a successful defense of the 7.30 level than against due to firm tightness in CNY liquidity.

The PBoC is caught between a rock and a hard place, but the defense of the CNY is probably their main objective at this juncture. More from my colleague Emil Moller on the topic here.

Chart 1: The PBoC tightens liquidity while cutting rates

The panic will subside if the PBoC manages to defend the 7.30 handle in USDCNY. Could we reach “peak China panic” during today’s trading? We look forward to it alongside the FOMC meeting minutes in our morning report.

Get access / Login

0 Comments

STENO RESEARCH IS JOINING REAL VISION

From July 2025, Steno Research is joining Real Vision to create the ultimate macro research product for you!

As a subscriber, this means the following:

Yearly subscriber: For legal reasons, we cannot transfer your pre-paid subscription directly. You need to register with Real Vision and then we’ll transfer your pre-paid subscription quickly afterwards. Simply go to https://www.realvision.com/free and sign up - and then we’ll take care of the rest! We will shut down service of Steno Research on July 31st, so be sure to make the transfer to keep receiving our content.

Already a RV subscriber?
Please check that you are using the same e-mail. If yes, you don't need to do anything. If not, please contact [email protected].

Monthly subscriber: Your current monthly subscription with Steno Research will end during July (31st at the latest). To continue accessing our research (and more), you’ll need to sign up for a Real Vision membership. Check out your options on: https://www.realvision.com/pricing

For Institutional Clients:
- Your access has been moved to our new institutional offering at NowcastIQ.com
- If you haven’t been moved already, please contact [email protected]