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PBoC Kicks USD/CNH Higher

CHINA YUAN

Spot USD/CNH has rallied after another weaker than expected PBoC fix, which came in at CNY6.7986 vs. BBG estimate of CNY6.7943. By fixing the central USD/CNY mid-point above the forecast value for the second consecutive day, the PBoC seem to be trying to reign in the yuan's recent rapid appreciation. USD/CNH last deals +112 pips at CNH6.7952.

  • From a technical perspective, gains past Sep 21 high of CNH6.8079 would clear the way to Sep 9 high of CNH6.8610, a key near-term resistance. Bears need a pullback under Sep 16 low of CNH6.7424 to confirm the resumption of a downtrend.
  • Looking ahead, China's final BoP current account balance for Q2 hits on Friday.

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