Optimism from China's current assistance steps and restored USD softness have actually manifested onto gains in the CNH, OCBC's FX strategists Frances Cheung and Christopher Wong note.
USD softness manifests as gains in the CNH
“USD/CNH briefly traded a low of 6.9950 before rebounding. The huge decrease in USDCNH past essential mental level saw different USD/AXJs trade lower. USD/SGD traded close to 1.28-lows while USD/MYR went listed below 4.11 briefly (vs. close of 4.1578 the other day). A mix of more gains in RMB, development in the area looking well, Fed relieving cycle and softer USD must continue to benefit AXJ FX.”
“On the day-to-day repair, USD/CNY was set at 7.0202, mainly in line with Bloomberg agreement for 7.0206. Markets were earlier seeing if policymakers will clearly press back versus RMB gratitude (by signaling through the repair) and it appeared there was no strong push back. The momentum forward for RMB must take hints from China equity markets.”
“More continual gains ought to see RMB trade with a tighter connection. USD/CNH was last at 7.0130 levels. Bearish momentum on day-to-day chart undamaged while RSI is near oversold conditions. Intra-day retracement not eliminated. Resistance at 7.0330 (50% fibo), 7.07 levels. Predisposition to offer rallies. Assistance at 6.99, 6.9540 (61.8% fibo).”
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