Weak China data and fear of an FX policy shift weighing on CNY: Standard Chartered

Quotes from Standard Chartered:

-USD-CNY onshore spot rates ended the Year of the Horse within a whisker of the top of the onshore trading band. This was the first time the CNY traded soclose to the edge of the band since the band widening in March 2014.

-The absence of vigorous People's Bank of China (PBoC) intervention to drive the spot rate close to the mid-point of the band, along with modestly higher daily USD-CNY fixes, has sparked new fears that Chinese FX policy favours outright CNY depreciation.

-These fears have been reinforced by a subdued growth-inflation mix, which gives Chinese authorities little reason to tolerate new trade-weighted CNY gains. Growth in cement and electricity production - arguably a reliable measure of economic activity - has been decelerating since early 2014 and is near multi-year lows.