China Macroeconomics & Academia

Christopher Balding

FX & Rates

The reversal in the CNY requires some more in depth analysis to look not just at the forwards rule change and the CNY link to the USD, but to the larger flow of funds that is pushing the CNY.Given the rapid rise of the CNY against a depreciating USD, what stands out is the low quality prediction of the forwards market.  As we can see in Figure 1, the forwards market except in very recent history, failed poorly at understanding the size and directionality of the market.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/033/622/original/Figure%201.jpg?1505437747" class="editor-image img-responsive" data-smartkarma-image-id="33622"></figure><div class="content-caption">Figure 1</div>Given the current…

The reversal in the CNY requires some more in depth analysis to look not just at the forwards rule change and the CNY link to the USD, but to the larger flow of funds that is pushing the CNY.Given the rapid rise of the CNY against a depreciating USD, what stands out is the low quality prediction of the forwards market.  As we can see in Figure 1, the forwards market except in very recent history, failed poorly at understanding the size and directionality of the market.Figure 1Given the current…

Emerging Markets Cross-Asset Strategist, Emvest Partners

Guillaume Coutant

Emerging Markets Cross-Asset Strategist

Cross-Asset Emerging Markets Technical Research

Emvest Partners

Emvest Partners is the leading independent French financial analyst specializing in Emerging Markets for  Asset Managers, Hedge Funds and Family Offices. The studies provided by Emvest Partners are based on a top-down, cross-asset and relative-value approach of the financial markets. The articulation of macroeconomic analysis and technical analysis improves the consistency of the recommendations, the mitigation of risks of error and a significant improvement in performance.

Technical Analysis

Long term consolidation of <a href="https://www.smartkarma.com/entities/22820" target="_blank" data-smartkarma-citation="entities:22820:1">CNY (USDCNY CURNCY)</a> swaps expected since the beginning of 2017.The bounce which took place since June 2017 makes the market back close to intervention levels for a new receiving move.In the midterm, the 1-5y swap curve is expected to flatten below 37/40bps to reach 20bps.The bullish flattening expected will probably go in line with a flight to safety from Chinese assets and dodgy economic data.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/033/599/original/CCSWNI5%20Curncy%20%28CNY%20SWAP%20NDIRS%207%202017-08-30%2012-06-26.png?1505401573" class="editor-image img-responsive" data-smartkarma-image-id="33599"></figure>Therefore, preference is for the 5y NDIRS that should be received below the…

Long term consolidation of CNY (USDCNY CURNCY) swaps expected since the beginning of 2017.The bounce which took place since June 2017 makes the market back close to intervention levels for a new receiving move.In the midterm, the 1-5y swap curve is expected to flatten below 37/40bps to reach 20bps.The bullish flattening expected will probably go in line with a flight to safety from Chinese assets and dodgy economic data.Therefore, preference is for the 5y NDIRS that should be received below the…

On Friday last week, the PBOC ended the 20% reserve requirements for CNY forward trading.  We said at the time that while mechanically, it would have minimal impact on the direction of the RMB, it was a clear signal that the PBOC at least wanted the RMB to flatten and we would expect lower the RMB. What we did not expect is that it would be quite so abrupt.As we can see in Figures 1 and 2, the CNY was on a clear and rapid decline. After the announcement, the &lt;&lt;RMB against the USD reversed…

On Friday last week, the PBOC ended the 20% reserve requirements for CNY forward trading.  We said at the time that while mechanically, it would have minimal impact on the direction of the RMB, it was a clear signal that the PBOC at least wanted the RMB to flatten and we would expect lower the RMB. What we did not expect is that it would be quite so abrupt.As we can see in Figures 1 and 2, the CNY was on a clear and rapid decline. After the announcement, the &lt;&lt;RMB against the USD reversed…

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

USD had a reprieve so far this week after hitting new lows for the year last week.  However, EM currencies, in particular, have held most of their recent gains and retain their uptrend.  We see some risk of a correction in EUR from an over-bought condition.  After two weeks of consolidation in AUD/NZD, we see upside risks building on a weaker NZ economic performance and political risk, while stronger global growth underpins industrial metals prices and lends support for the AUD.  There is every reason to see the Australian labour data this week continuing its improving trend, while NZ housing data may again show a weaker trend.

USD had a reprieve so far this week after hitting new lows for the year last week.  However, EM currencies, in particular, have held most of their recent gains and retain their uptrend.  We see some risk of a correction in EUR from an over-bought condition.  After two weeks of consolidation in AUD/NZD, we see upside risks building on a weaker NZ economic performance and political risk, while stronger global growth underpins industrial metals prices and lends support for the AUD.  There is every reason to see the Australian labour data this week continuing its improving trend, while NZ housing data may again show a weaker trend.

USD Reprieve, but a Lot to Prove, NZD Facing Economic and Political Headwinds

It was announced this weekend that the PBOC is ending the requirement that banks trading RMB forwards would need a 20% reserve.  This has significant implications for the direction of the RMB though more as a signal than what it means for market movement.The 20% reserve rule which the PBOC implemented when it was trying to make it more expensive to short the RMB, now by ending this rule makes it cheaper to short the RMB.  This rule was one of many roadblocks that the PBOC attempted to use to…

It was announced this weekend that the PBOC is ending the requirement that banks trading RMB forwards would need a 20% reserve.  This has significant implications for the direction of the RMB though more as a signal than what it means for market movement.The 20% reserve rule which the PBOC implemented when it was trying to make it more expensive to short the RMB, now by ending this rule makes it cheaper to short the RMB.  This rule was one of many roadblocks that the PBOC attempted to use to…

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

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CNY (USDCNY CURNCY)

Underlying RMB and Pricing Mismatches

The reversal in the CNY requires some more in depth analysis to look not just at the forwards rule change and the CNY link to the USD, but to the...

Christopher Balding

CNY 5y Swaps Are Going to Be Received

Long term consolidation of CNY (USDCNY CURNCY) swaps expected since the beginning of 2017.The bounce which took place since June 2017 makes the...

Guillaume Coutant

What's Behind the RMB Weakening?

On Friday last week, the PBOC ended the 20% reserve requirements for CNY forward trading. We said at the time that while mechanically, it would...

Christopher Balding

USD Reprieve, but a Lot to Prove, NZD Facing Economic and Political Headwinds

USD had a reprieve so far this week after hitting new lows for the year last week. However, EM currencies, in particular, have held most of their...

Greg Gibbs

Re-Evaluating the RMB with FX Change

It was announced this weekend that the PBOC is ending the requirement that banks trading RMB forwards would need a 20% reserve. This has...

Christopher Balding

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