Tim Condon, Chief Economist at ING, suggests that for the Chinese confidence boost to get traction the money and credit data need to show up in stronger economic activity. Key Quotes “We think the release of the China money and credit data on Tuesday, February 16 restored risk-on sentiment; the VIX fell 30% to 19 by last Monday. We also think yesterday’s weak CNY fixing – the 0.17% depreciation was the largest since the first week of January – restored risk-off sentiment; the VIX bounced 10% to 21. The PBOC depreciated the fixing by another 0.04% today. We didn’t consider yesterday’s CNY fixing unusually weak; our measure of the CFETS NEER was unchanged. But the slight widening in the USDCNY-USDCNH basis makes us think that despite (because of?) PBOC Governor Zhou’s rambling remarks about exchange rate policy in the Caixin interview – “…we will significantly enhance the reference to a basket of currencies. But this does not mean pegging to a basket, as there are many other factors influencing the exchange rate” – it looks as black-box as ever. We repeat what we said after the release of the January money and credit data: For the confidence boost to get traction the money and credit data need to show up in stronger economic activity, which makes the February PMI data due March 1 extremely important.” For more information, read our latest forex news.