USD/CNH may follow USD/JPY if it breaks above 160 – Societe Generale
Source Fxstreet
If USD/JPY does break through 160 in the coming days the USD/CNH pair may come along, Chief FX Strategist at Societe Generale Kit Juckes argues.
The US/Japanese rate gap is too big
“USD/CNH and USD/JPY move in tandem. The Japanese Yen (JPY) moves more, and the Chinese Yuan (CNH) moves are more controlled, but they seldom move in opposite directions. This reflects economic similarities as much as geographical proximity and it is changing the way the FX market works.”
“At the moment, the Bank of Japan (BoJ) and the Ministry of Finance (MOF) are trying to talk the Yen around, and the chances of both rate hikes and bond sales have increased, but with the US/Japanese rate gap so big, does anything the BoJ does matter yet?”
“If USD/JPY does break through 160 in the coming days, preventing further Yuan weakness would be very difficult indeed.”
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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