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. They see room for further Renminbi (RMB) strength supported by exporter conversions and a softer US Dollar (USD), but stress policymakers prefer a measured appreciation pace. Technicals show mild bearish momentum on USD/CNH with resistance around 6.7540–6.7630 and support near 6.74–6.72.

RMB strength but controlled by fixing

"Post-NFP gains consolidate. USD/CNH slipped after Friday’s weak US payrolls print, with RMB trading close to its strongest levels in more than three years. Some gains were pared overnight as softer China inflation data refocused attention on still-soft domestic demand."

"The fixing pattern also continued to suggest that policymakers prefer a more measured pace of appreciation. Yesterday’s USD/CNY fix was set at 20 pips lower compared with Bloomberg expectations for a -202pips decline."

"We continue to see room for RMB strength, supported by exporter conversions and a softer USD backdrop, but policymakers are likely to keep the pace measured."

"Mild bearish momentum on daily chart intact though there are early signs to show waning momentum while RSI shows signs of rising from near oversold conditions."

"Some retracement higher not ruled out but bias to lean against strength. Resistance at 6.7540, 6.7630 (21 DMA). Support at 6.74, 6.72 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)