China's economic pressure is intensifying, with the exchange rate approaching last year's high😿
The relentless onslaught of bearish China news continued unabated, with Zhongrong International Trust threatening to miss a US$19mm wealth-management payment over the weekend due to liquidity concerns. Coupled with the earlier Country Garden concerns, along with the significant weakening in Chinese data, FX traders have ratcheted up their expectations of further weakening in the months ahead, with reported spot and option volumes (>7.30 strikes) coming in over >3x higher than normal on an otherwise extremely slow day in macro. Spot USDCNY has touched above 7.25, with last October's highs (7.32) now clearly at risk, just ahead of a further set of activity data (retail sales, IP) and the 1-year lending rate to be released this morning.
