PBOC Weakens Yuan Slightly At Fix; 6.50 Level Eyed in USD/CNH

The PBOC fixed USD/CNY at 6.5362, 7 pips higher than the previous fix.

• After blipping higher in the wake of the FOMC meeting the pair continued its move lower, accelerating the decline in Asia, the pair last down 82 pips at 6.5043 – moving closer to the 6.50 barrier that was breached on December 9.
• A recent report in the China Securities Journal has garnered some attention. The yuan may be on a continuing phase of appreciation against the dollar, given China's strong exports and monetary policies, the Journal reported citing analysts. The yuan continued to derive support from the stronger economy while the dollar index has weakened since Dec. 9, the Journal said. The PBOC's recent MLF operations and peripheral adjustments may slow but not reverse the overall rising trend, the report said.
• From a technical perspective the pair is heading towards 2016 and 2017 lows and 78.6% Fibonacci retracement, which were made at 6.4437 and 6.4417, respectively. Below are the May 2018 high at 6.4323 and also the February and early May 2018 highs at 6.3835 and 6.3774.