Cooling inflation plus Walsh's hawkish remarks! How will the Fed act?
RMB Exchange Rate: U.S. Core CPI MoM Increase Below Expectations
![[Market Recap] In the previous trading session, USD/CNY traded in a volatile range. Onshore RMB closed at 6.7774 against the dollar at 16:30, down 72 pips from the prior day, and ended the night session at 6.7738. The central parity rate for CNY/USD was set at 6.8130, 17 pips stronger than the previous fix. At the New York close, the DXY rose 0.09% to 100.04. [Core Logic] U.S. CPI data was released—while the YoY CPI reading hit a three-year high, core CPI MoM came in below expectations, suggesting that the oil price shock has not broadly spilled over into the wider economy. Following the release, U.S. Treasury yields hit a new intraday low, and the dollar index briefly turned negative, though the data did not alter medium- to long-term market expectations. Traders continue to bet on a Fed rate hike in October, allowing the dollar index to recover its earlier losses by the close. On the RMB front, China’s export data remained robust, supported by strong overseas demand and elevated global economic sentiment, which underpins the resilience of China’s exports. The notably stronger-than-expected export figures further solidify the appreciation fundamentals for the RMB. [Strategy Recommendation] In the near term, exporters are advised to opportunistically lock in forward FX sales in batches around the 6.83 level to hedge against potential RMB depreciation and associated revenue erosion. Importers, meanwhile, may consider implementing a rolling spot FX purchase strategy near the 6.77 mark. [Key News] 1) AI-driven demand pushed up prices in nonferrous metals, computers, and other sectors; China’s May PPI rose 3.9% YoY, hitting a four-year high, while CPI increased...](https://nnqimage.futunn.com/sns_client_feed/29709840/20260611/web-1781139604216-idOxZXkGm7.jpeg/big?area=1&is_public=true&imageMogr2/ignore-error/1/format/webp)
[Market Recap] In the previous trading session, USD/CNY traded in a volatile range. Onshore RMB closed at 6.7774 against the dollar at 16:30, down 72 pips from the prior day, and ended the night session at 6.7738. The central parity rate for CNY/USD was set at 6.8130, 17 pips stronger than the previous fix. At the New York close, the DXY rose 0.09% to 100.04.
[Core Logic] U.S. CPI data was released—while the YoY CPI reading hit a three-year high, core CPI MoM came in below expectations, suggesting that the oil price shock has not broadly spilled over into the wider economy. Following the release, U.S. Treasury yields hit a new intraday low, and the dollar index briefly turned negative, though the data did not alter medium- to long-term market expectations. Traders continue to bet on a Fed rate hike in October, allowing the dollar index to recover its earlier losses by the close. On the RMB front, China’s export data remained robust, supported by strong overseas demand and elevated global economic sentiment, which underpins the resilience of China’s exports. The notably stronger-than-expected export figures further solidify the appreciation fundamentals for the RMB.
[Strategy Recommendation] In the near term, exporters are advised to opportunistically lock in forward FX sales in batches around the 6.83 level to hedge against potential RMB depreciation and associated revenue erosion. Importers, meanwhile, may consider implementing a rolling spot FX purchase strategy near the 6.77 mark.
[Key News]
1) AI-driven demand pushed up prices in nonferrous metals, computers, and other sectors; China’s May PPI rose 3.9% YoY, hitting a four-year high, while CPI increased 1.2% YoY.
2) U.S. CPI rose 4.2% year-over-year in May, hitting a three-year high, while core CPI accelerated to a 2.9% annual increase; however, the month-over-month gain slowed to 0.2%, below expectations. The 'New Fed Wire' (a.k.a. Nick Timiraos of The Wall Street Journal) stated the CPI report resolved nothing and that Federal Reserve officials could draw no definitive conclusions from it. Bond traders remain steadfast in betting on an interest rate hike within the year.
3) Trump threatened strikes on Iranian power plants and bridges, vowing 'very fierce' attacks, while Iran’s military warned of an even stronger response. Iran’s defense minister said military action against Iran is 'far from over.'
Author: Assistant Director of Nan Hua Research Institute, Zhou Ji Z0017101
Important Disclaimer: The content and opinions in this article are for learning and reference purposes only and do not constitute any investment advice. The market carries risks, and investments should be made with caution.
![[Market Recap] In the previous trading session, USD/CNY traded in a volatile range. Onshore RMB closed at 6.7774 against the dollar at 16:30, down 72 pips from the prior day, and ended the night session at 6.7738. The central parity rate for CNY/USD was set at 6.8130, 17 pips stronger than the previous fix. At the New York close, the DXY rose 0.09% to 100.04. [Core Logic] U.S. CPI data was released—while the YoY CPI reading hit a three-year high, core CPI MoM came in below expectations, suggesting that the oil price shock has not broadly spilled over into the wider economy. Following the release, U.S. Treasury yields hit a new intraday low, and the dollar index briefly turned negative, though the data did not alter medium- to long-term market expectations. Traders continue to bet on a Fed rate hike in October, allowing the dollar index to recover its earlier losses by the close. On the RMB front, China’s export data remained robust, supported by strong overseas demand and elevated global economic sentiment, which underpins the resilience of China’s exports. The notably stronger-than-expected export figures further solidify the appreciation fundamentals for the RMB. [Strategy Recommendation] In the near term, exporters are advised to opportunistically lock in forward FX sales in batches around the 6.83 level to hedge against potential RMB depreciation and associated revenue erosion. Importers, meanwhile, may consider implementing a rolling spot FX purchase strategy near the 6.77 mark. [Key News] 1) AI-driven demand pushed up prices in nonferrous metals, computers, and other sectors; China’s May PPI rose 3.9% YoY, hitting a four-year high, while CPI increased...](https://nnqimage.futunn.com/sns_client_feed/29709840/20260611/web-1781139720780-XmIDiwx7Ej.png/big?area=1&is_public=true&imageMogr2/ignore-error/1/format/webp)
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
Comments
to post a comment
3