USDCNY: Still bearish CNY, but CNH looks stretched - TDS

FXStreet (Delhi) – Sacha Tihanyi, Senior Emerging Markets Strategist at TDS, suggests that while they remain bearish CNY, they feel that the gap be-tween CNH and CNY leaves too much risk from (temporary) intervention in either the offshore or onshore market.

Key Quotes

“Instead, we prefer to express a bearish CNY view via TWD, given the strong trade and economic linkages, policy approach of the CBCT towards the TWD, and the likelihood of further easing in monetary conditions in Taiwan either via the currency or rates.

We target USDTWD (relative onshore spot reference 33.28, targeting 34.50 with a stop at 32.74), via a 3mth NDF outright with spot reference of 33.61, a target of 34.87 and stop loss of 33.12.”