The Chinese Yuan (RMB) traded close to its strongest levels in over three years following a slip in USD/CNH after weaker-than-expected US payroll data, according to OCBC analysts Sim Moh Siong and Christopher Wong [1]. The analysts attribute the RMB's strength to ongoing exporter conversions and a softer US Dollar, but emphasize that Chinese policymakers are likely to maintain a measured pace of appreciation [1].
Market technicals indicate mild bearish momentum for USD/CNH, with resistance levels identified at 6.7540–6.7630 and support at 6.74–6.72 [1]. The daily chart shows early signs of waning bearish momentum, while the RSI is rising from near oversold conditions, suggesting that some retracement higher in USD/CNH is possible, though the bias remains to lean against strength [1].
The fixing pattern continues to reflect policymakers' preference for gradual appreciation. For example, the previous day's USD/CNY fix was set at 20 pips lower compared to Bloomberg's expectation of a -202 pips decline, underscoring the authorities' cautious approach [1].
Some gains in the RMB were pared overnight as softer China inflation data shifted market focus back to persistent softness in domestic demand [1]. Despite this, OCBC maintains that there is still room for further RMB strength, provided exporter conversions and a weaker USD backdrop persist [1].
CONCLUSION
The Chinese Yuan remains near multi-year highs, supported by exporter flows and a softer US Dollar, but policymakers are signaling a preference for gradual appreciation. Technicals suggest mild bearish momentum for USD/CNH, with the possibility of some retracement. Market participants should expect measured moves in the RMB as authorities balance currency strength with domestic economic considerations.