Chinese Yuan: RMB gains hinge on PBoC fix – OCBC

FXStreet Insights Team FXStreet

OCBC strategists Sim Moh Siong and Christopher Wong note that the Renminbi (RMB) has extended gains, with USD/CNY breaking below 6.70 as the People's Bank of China (PBoC) strengthened the fix for nine straight sessions ahead of the Trump–Xi meeting. They see scope for RMB to stay supported if strong fixes persist, but warn that wide US–China yield differentials and soft domestic fundamentals should cap the pace of appreciation beyond the event.

Fixing strategy drives near-term RMB path

"RMB extended gains, with USD/CNY breaking below 6.70 as the PBoC strengthened the fix for a ninth straight session. The firmer fixing bias is notable given the broader USD/rates backdrop and reinforces the recent shift in fixing guidance towards allowing a somewhat firmer RMB."

"This also comes ahead of the Trump-Xi meeting, where we see room for RMB to stay supported into the event. Near term, the fix remains key to watch."

"If the PBoC maintains the recent pace of stronger fixes, RMB momentum can extend; any slowdown or pause, however, may disappoint expectations and take some steam out of the move. Beyond the meeting, wide US-China yield differentials and soft domestic fundamentals should still limit the pace of RMB appreciation."

"Daily momentum is showing very tentative signs of turning mild bearish while RSI fell. Some downside pressure not ruled out but largely still in orderly range. Immediate support around 6.69 levels is key before next support around 6.67 levels. Resistance at 6.7030, 6.7110 (21 DMA)."

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