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USD/CNY extends decline as softer US data supports gradual RMB gains
OCBC points to weaker US CPI and PPI weighing on the dollar, while firmer PBoC fixings and a large trade surplus support a gradual, capped RMB appreciation outlook.
OCBC strategists Sim Moh Siong and Christopher Wong said USD/CNY has extended its decline, driven by softer US Consumer Price Index and Producer Price Index readings that have weighed on the dollar and reduced expectations for Fed tightening.
They added that firmer People’s Bank of China fixings have reinforced the move, suggesting Chinese policymakers are comfortable with some gradual RMB appreciation rather than pushing the currency higher more aggressively.
OCBC noted China’s large trade surplus and exporter dollar selling as supportive, but said soft domestic growth and the potential for further policy easing should limit the pace of RMB gains.
The strategists highlighted key near term levels, with USD/CNH last seen around 6.7690, support at 6.7540 and resistance at 6.7860 to 6.7900, adding that a decisive break could open room toward 6.72 to 6.74.