HALISTER1: Stay Bearish on CNH as Liquidity Squeeze May Not Last: Mizuho

Stay Bearish on CNH as Liquidity Squeeze May Not Last: Mizuho

(Bloomberg) -- Mizuho Bank prefers to buy USD/CNH on dips as CNH liquidity squeeze, which has helped curb bearish yuan sentiment, isn’t structural and is unlikely to be long-lasting, Asian FX strategist Ken Cheung writes in note today.
  • Remains bearish on CNH; sees USD/CNH testing 6.72 in near term if Sept. Fed rate hike unfolds although FX pair’s upside is capped currently
  • CNH rises 0.12% to 6.6879 per USD; USD/CNH 12-month forward points climb 102.5 to 1,760 after earlier touching 1,973, highest since Mar. 11
  • PBOC’s plan to resume 28-day reverse repo is a bid to lengthen the funding maturity and lower short-term liquidity risk, Cheung says; adds this offering could reduce market reliance on short-term funding
  • If PBOC leaves the 28-day reverse repo yield at 2.6% as it did in Feb., 1-month interbank repo rate could stabilize further
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Ken Cheung (Mizuho Financial Group Inc)

To de-activate this alert, click here

UUID: 7947283