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19 Apr 2013
Forex Flash: USD/CNY looks bearish ahead - BTMU
FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts are bearish on USD/CNY for the week ahead and see spot moving between a range of 6.1650 and 6.1950.
They begin by noting that after a week in which the Chinese very explicitely confirmed a band widening is on the agenda for 2013, (a view that has now made the rounds onshore), such that they have brought forward their expectation of a band widening from the start of 4Q13 to the start of 3Q13. They believe that Chinese authorities may want to dampen a little the appreciation fever they themselves launched. They write, “That doesn't mean, however, that the bias for USD/CNY isn't still bearish. The pattern of fixings may meander around the low levels already set below 6.2400 so that spot stays relatively contained compared with last week. The willingness of the Chinese to consider another band widening only a year or so after the last move is a confirmation that 2020 for capital account liberalization is more serious than what many probably believe.”
They begin by noting that after a week in which the Chinese very explicitely confirmed a band widening is on the agenda for 2013, (a view that has now made the rounds onshore), such that they have brought forward their expectation of a band widening from the start of 4Q13 to the start of 3Q13. They believe that Chinese authorities may want to dampen a little the appreciation fever they themselves launched. They write, “That doesn't mean, however, that the bias for USD/CNY isn't still bearish. The pattern of fixings may meander around the low levels already set below 6.2400 so that spot stays relatively contained compared with last week. The willingness of the Chinese to consider another band widening only a year or so after the last move is a confirmation that 2020 for capital account liberalization is more serious than what many probably believe.”