The recent USD/CNY fixings suggest a measured pace of RMB depreciation, OCBC analysts Frances Cheung and Christopher Wong note.

USD/CNH continues to move up towards 7.31

“The recent USD/CNY fixings have followed a pattern that continued to reinforced out view that authorities are pursuing a measured pace of RMB depreciation.”

“Change in daily fix on average is about 17pips since 19 Jun (about 6 days) vs. average daily change of about 4.5pips/day since May2024. Higher USD/CNY fix and wider CNH-CNY spread gives the impression there could be further weakening in RMB ahead.”

“USD/CNH was last at 7.3011. Momentum is bullish while RSI rose. Risks skewed to the upside. Resistance at 7.31. Support at 7.2705 (21 DMA).”