Chinese Yuan: Measured appreciation with strong RMB – OCBC
OCBC’s Sim Moh Siong and Christopher Wong note USD/CNH slipped after weak US payrolls, with the Renminbi (RMB) near its strongest levels in over three years.
The Chinese Yuan (RMB) has been experiencing a measured appreciation, with the Renminbi (RMB) near its strongest levels in over three years. OCBC's Sim Moh Siong and Christopher Wong noted that the USD/CNH exchange rate slipped after weak US payrolls, and the RMB is being supported by exporter conversions and a softer USD. However, policymakers prefer a gradual pace of appreciation.
Technical analysis shows mild bearish momentum on USD/CNH, with resistance at 6.7540-6.7630 and support at 6.74-6.72. After Friday's weak US payrolls print, some gains were pared overnight as China inflation data refocused attention on domestic demand. The fixing pattern also indicated that policymakers prefer a more measured pace of appreciation, as the USD/CNY fix was set at 20 pips lower compared with expectations. Despite some retracement higher being possible, the bias leans against strength.
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