USD/CNY: bullish bias – (6.9000-6.9750) - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that we were badly wrong last week, on both direction and range.

Key Quotes:

"Momentum may stay your friend for now. Onshore apparently needs/wants dollars. We still don't think authorities will allow the cross to exceed 7 before year-end and after November, authorities don't want to lose more reserves."

"But they may have no choice. Even b4 #Trump is in charge, capital is still flowing out."

"The romancing of a hawkish Fed may also take a few more days."

"Nonetheless we feel only mildly bullish as a stronger and stronger USD story increasingly feels stretched. At some stage the Fed may step back in if a stronger USD tightens financial conditions.

The selloff is thinning already thin pre-holiday liquidity."