EUR likely to advance vs. USD this year, rise in eur’s weighting could lead to bigger rise in cny: ScotiaBank
来源: FxWire Pro - Commentary / 01 一月 2020 23:07:54 America/New_York
The EUR is expected to advance against the USD this year, while an increase in the EUR’s weighting could lead to a bigger rise in the CNY to ensure a steady yuan versus the basket, according to the latest research report from Scotiabank.
China’s factory activity expanded for the second straight month in December, with rising output sub-index and dipping new orders sub-index. The nation’s official manufacturing PMI came in unchanged at 50.2 in December, compared to market expectations for 50.1.
Further, the output sub-index rose to a 16-month high of 53.2, while the new orders sub-index dipped slightly to 51.2 from 51.3 in November. More importantly, easing trade tensions with the US lifted the new export orders sub-index above the 50 threshold for the first time since May 2018.
China is expected to implement more stimulus measures in addition to a 50 bp RRR cut effective from 6 January to further boost credit supply and revive economic growth, the report added.
Further reductions in the rate of the 7-day reverse repos, 1-year MLF and 1-year LPR would pull down the front-end CNY IRS/NDIRS, while steepening the curve in the run-up to the Chinese New Year (25 January).
On the FX side, the PBoC has been setting USD/CNY in line with market expectations since mid-October. The yuan is expected to advance moderately in the coming weeks, catching up with recent gains in regional peers such as the KRW and TWD.
"We maintain our short USD/CNH position amid sustained risk appetite arising from easing trade tensions with the US and the PBoC’s monetary easing measures," Scotiabank further commented in the report.© FxWire Pro 2020. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.