CNH crosses: More balanced risk on a less vulnerable CNH

Irene Cheung, Senior Strategist at ANZ, explains that after a prolonged period of underperformance, CNH is likely to be less vulnerable this year, helped by improving fundamentals and a mild monetary tightening bias by the PBoC.   

Key Quotes

“With key events ahead (the first summit between President Trump and President Xi on 6-7 April, and US Treasury FX report due in April), the situation remains highly fluid.”     

“Some crosses (NZD/CNH, SGD/CNH, JPY/CNH) may see range trading in the near term, but we are cautious about the binary risk in the elections in France, which could drive the EUR/CNH in either direction.”

“With premiums falling further, optionality could be used to express one’s views or to provide protection.”