Market Update

PBoC chief Zhou says China will widen yuan's the trading band, gives no timetable. Adds widening of yuan band will depend on market conditions.

As noted above, the CNY comments by Zhou are clearly positive for Asian currencies. It adds to the perception that Asian policymakers are giving concessions to US Treasury secretary Paulson on the eve of his trip. In the current carry-unwind environment it is positive for yen.

We still don’t expect the the JPY strength to recede for now. We also still see too much complacency in Emerging Market currencies. Don’t be long EM Carry.