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Flash: USD/CNY hsa neutral bias – BTMU

FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analyst believe that USD/CNY has a neutral bias and is set to range between 6.1200 and 6.1700 ahead.

They begin by noting that in times past when they´ve tried to put together an events trade surrounding US-China meetings, they have often observed that Chinese attempts to fix the renminbi stronger tended to end about 8-10 days before the actual event itself. If this pattern holds, the spirited down fixings of USD/CNY should have ended about midweek this week ahead of the 7-8 June 2013 Summit between Presidents Xi and Obama. They feel that this suggests flatter if not slightly higher fixes in the week ahead, and add that US names have been seen buying very aggressively spot, DF and NDFs, in both CNY and CNH space, perhaps in keeping with the above logic. Such buying may keep USD/CNY buoyant. They finish by writing, “Longer term, however, we don't see anything to the recent buying to suggest a change in the preferred direction of capital flows (especially those of the Chinese themselves), which remains from out to in.”

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