Market Comment | Risk-off mood intensifies as RMB breaches key 7 level

Risk-off mood has intensified after the Chinese RMB, both on-shore and off-shore, breached the psychological critical level of 7.0 against the USD, in the wake of further escalation in trade frictions with the US post Trump’s plans to impose 10% tariffs on $300 bn Chinese imports, alongside increased risk of a hard-Brexit.

Key points

• Key points:
• The CNY+12M futures point to much sharper depreciation.
• Sharp fall in US treasury yields while the 10Y German bond yields hit fresh record low below -0.50%.
• Safe-haven currencies appreciated whereas the USD is suffering from the trade war, and so are the EM currencies.
• Global stock markets continue to tumble significantly between 2-3% on average.

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