MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
BTC Flat at $89,300 Despite $1.02B ETF Exodus — Buy the Dip Toward $107K? 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
Nasdaq Proposes Fast-Track Rule to Accelerate Index Inclusion for Major New Listings 
Elon Musk’s Empire: SpaceX, Tesla, and xAI Merger Talks Spark Investor Debate 
RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
BOJ Holds Interest Rates Steady, Upgrades Growth and Inflation Outlook for Japan 
Fed Governor Lisa Cook Warns Inflation Risks Remain as Rates Stay Steady 
2016 year-end forecast of USDCNY at 6.85 is firmly upheld. The prospects of a Fed hike before year-end and a rise in capital outflows would likely to drive further Chinese offshore currency depreciation.
We also hold the bias that the PBoC would let further weakness in CNY after the September G20 summit, as a policy reaction to the IMF’s suggestion to allow market forces to guide the exchange rate and move more towards a floating FX regime.
In addition, as downside risks to growth increase in Q4, the motivation to ease financial conditions via lowering Renminbi’s trade weight index will become more compelling again, especially considering the CFETS TWI has been range bound around 94 since July.
This structure is a standard 1y call spread strikes 6.85/7.20 half financed by selling a put strike 6.55, offering beyond 7.20 a maximum leverage of 11 times at the expiry. With no digital risk involved and thanks to the limited convexity of long-dated options, the position can be conveniently delta-hedged if the spot moves lower in the early stages.
Buy USDCNH 1y Seagull strikes 6.55/6.85/7.20 Indicative offer: 0.42% (vs 0.82% for the call spread strikes 6.85/7.20, spot ref: 6.6450)
Rationale: USDCNH higher highs and higher lows, the next wave of RMB depreciation would see USDCNY trade in a likely range of 7.00-7.20 by mid-2017 (the Q2 2017 point forecast is 7.10).
