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11 Mar 2014
Flash: Opening tactical long USD/CNH - Nomura
FXStreet (Bali) - Nomura highlights the possibility of entering a tactical long USD/CNH position through options after the USD/CNY has continued to squeeze shorts ahead of an expected USD/CNY band widening.
Key Quotes
"The timing of the move was slightly earlier than we expected, but we think that it is prudent to establish some short-term long USD/CNH positions through options to capture a potential further squeeze higher driven by the central bank-induced volatility."
"The authorities could continue to pressure USD/CNH higher to target the positions of Taiwanese corporates that have been relatively unaffected until now."
"Beyond near-term concerns, we continue to believe that the medium-term RMB appreciation trend is still intact given a relatively strong „real‟ basic balance surplus, although there is a higher risk of sporadic FX volatility from the PBoC."
Key Quotes
"The timing of the move was slightly earlier than we expected, but we think that it is prudent to establish some short-term long USD/CNH positions through options to capture a potential further squeeze higher driven by the central bank-induced volatility."
"The authorities could continue to pressure USD/CNH higher to target the positions of Taiwanese corporates that have been relatively unaffected until now."
"Beyond near-term concerns, we continue to believe that the medium-term RMB appreciation trend is still intact given a relatively strong „real‟ basic balance surplus, although there is a higher risk of sporadic FX volatility from the PBoC."