China yuan – “the strong trade balance and favourable global capital flow supports CNY CNH bullishness”

China’s record trade surplus continues to attract interest.

Here’s the data: China August trade balance data … more

From China International Capital Corporation (one of China’s largest investment banking and research services companies) we got this yesterday on the outlook for China trade and the currency

Not to be outdone, Citi have this on the yuan:

• “the strong fixing is in response to yet another record trade surplus … in August”
• “the sharp divergence away from market models is in line with policy makers’ intent of convincing market of two-way volatility to the fix”
• “DXY regression based market models expected 6.1733 given the weakness in EUR, GBP and JPY”
• looking ahead … “the strong trade balance and favourable global capital flow supports CNY/CNH bullishness”
• Tuesday’s jump in the CNY fixing “has reaffirmed CNY/CNH strengthening bias and we accordingly maintain short USDCNH … position”