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9 Apr 2015
USD/CNY: Neutral between 6.1850-6.2200 - BTMU
FXStreet (Guatemala) - Strategists at The Bank of Tokyo Mitsubishi UFJ explained that since the Southbound Connect quota remains fully used daily, expect more flows to arrive for A/H arbitrage (eg, to buy the same dividend at a lower price).
Key Quotes:
"That means higher USD/CNH influencing USD/CNY higher. But we think authorities onshore and in Hong Kong do not want to too much Connected volatility so we retain a neutral bias: There is higher topside but also higher bottom side. As analysts we instinctively don't want to chase the China trade surplus trend but consensus forecasts for March export growth looks too soft."
"Even at the consensus the 12-month rolling sum of trade surpluses would jump higher to USD525bn. We respect the Street's consensus 1Q15 GDP forecast of 7%YoY, below our view; but there could be a small +ve beat, maybe from services."
Key Quotes:
"That means higher USD/CNH influencing USD/CNY higher. But we think authorities onshore and in Hong Kong do not want to too much Connected volatility so we retain a neutral bias: There is higher topside but also higher bottom side. As analysts we instinctively don't want to chase the China trade surplus trend but consensus forecasts for March export growth looks too soft."
"Even at the consensus the 12-month rolling sum of trade surpluses would jump higher to USD525bn. We respect the Street's consensus 1Q15 GDP forecast of 7%YoY, below our view; but there could be a small +ve beat, maybe from services."