OCBC strategists cite softer US CPI and PPI, alongside firmer PBoC fixings, as drivers for the yuan’s gradual appreciation against the dollar.
The Chinese yuan extended gains against the US dollar after softer US inflation data reduced expectations for Federal Reserve tightening. USD/CNY declined as weaker Consumer Price Index and Producer Price Index readings weighed on the dollar, while firmer fixings from the People’s Bank of China supported the move.
China’s large June trade surplus and exporter dollar-selling flows provided additional support, though soft domestic growth and potential policy easing are expected to cap the yuan’s upside. Near-term resistance is seen at 6.7860/6.79, with a decisive break potentially targeting 6.72-6.74.
USD/CNH last traded at 6.7690, with bearish momentum intact on daily charts, though the RSI shows signs of a turnaround. The pace of yuan appreciation remains gradual due to domestic economic concerns.