The Chinese Yuan (Renminbi) has remained broadly rangebound against the US Dollar, with the People's Bank of China (PBoC) daily fixing serving as the primary anchor for currency movements, according to OCBC strategists Sim Moh Siong and Christopher Wong [1]. The USD/CNH pair fell to a recent low mid-week, influenced by softer US inflation data that weighed on the Dollar, while firmer PBoC fixings reinforced the Yuan's modest strength. However, the pair rebounded modestly towards the week's close [1].
Strategists note that the near-term direction of USD/CNH continues to be guided by the daily fix and broader USD trends. Recent fixing guidance indicates that Chinese policymakers are comfortable with allowing some gradual RMB strength, but there is no indication of a push for sharper appreciation at this time [1].
Despite the mild bearish momentum observed on the daily chart, there are tentative signs of this trend fading, as reflected by a rising RSI. Nevertheless, subdued domestic growth in China and expectations of policy easing are seen as limiting factors for further RMB gains in the near term [1].
Overall, OCBC expects USD/CNH to remain broadly rangebound, with the fixing continuing to anchor the pace and direction of moves, while macroeconomic factors cap the extent of any Renminbi appreciation [1].
CONCLUSION
The Chinese Yuan is expected to trade within a narrow range against the US Dollar, anchored by PBoC fixings and influenced by US inflation data. Subdued domestic growth and policy easing expectations are likely to limit further RMB gains in the near term.