China: Better trade data from the mainland - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the USD/CNY remains broadly stable (despite recent general USD weakness) of late while the marco-economic data flow has been generally favourable.

Key Quotes

“The Fed will no doubt be reassured by the increasing evidence that global trade may well be picking up. Both exports and imports growth in CNY and USD terms were better than expected suggesting the improvement in China data may be down not only to domestic policy stimulus steps but also down to improving external conditions. Still, while the export readings were better than expected, in USD terms, exports were still 2.8% down on a year ago levels.

We continue to expect renewed CNY weakness and interestingly the overnight HIBOR jumped 388bps to 5.45% today, the highest level since February and perhaps suggestive of action by the Chinese authorities to tighten offshore CNH liquidity in order to deter speculative CNH selling.”