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China: Signs Of CNY Stabilisation

CNY weakening has stalled a bit since China pushed up offshore money market rates. It sends a signal that China would like to slow the CNY depreciation on the back of recent signs of rising capital outflows and possibly to not add fuel to the fire in coming trade negotiations with the US. We expect the CNY to move sideways before resuming a gradual weakening against the USD on diverging monetary policy.

Chinese stocks are still under pressure but the declining trend in offshore stocks has faded recently. Bond yields increased last week on stories of rising supply as the Ministry of Finance urged local governments on Tuesday to accelerate bond issuance to support the economy.

Commodity prices keep declining. Metal prices especially have taken a big hit.

Danske Bank
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