USD/CNH: Upside risks as strong fix meets USD demand – OCBC
OCBC strategists Sim Moh Siong and Christopher Wong note that USD/CNH has traded higher as Iran-related geopolitical tensions support the Dollar. Beijing has been setting a stronger CNY fix, which has helped stabilise the Renminbi and partially offset broader Asian FX softness. However, persistent USD strength and weaker risk sentiment could force even stronger fixes to counter near-term depreciation pressures, with upside levels highlighted.
Geopolitics and fixing strategy guide pair
"USD/CNH traded higher overnight as geopolitical conflict in Iran showed little signs of de-escalation. The fixing pattern this week saw a slight pick-up in setting a stronger RMB fix, with 30d rolling average change in the USD/CNY fix rising to -33pips (vs. -27 pips a month ago). Continued trend in maintaining a strong fix can bring about relative stability in RMB (especially if expected fix-to-actual fix gap does not start to deviate), and that should help to partially mitigate against Asian FX softness."
"But if USD strength persists and risk sentiment deteriorates further, then it may require an even stronger CNY fix to offset near term depreciation pressure."
"USD/CNH was last at 6.9260 levels. Daily momentum is bullish while RSI rose. Risks remain skewed to the upside."
"Resistance at 6.9370 (50 DMA), 6.9520 and 6.9780 levels (38.2% fibo retracement of Aug high to Feb low). Support at 6.8970 (21 DMA), 6.88 levels."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Bank of America Hartnett: Strong US dollar impacts global liquidity, risk assets remain difficult to enter, turning point postponed to next spring
Bank of America's chief strategist Hartnett maintains a risk-averse stance, pushing the entry window back to next spring. The US Dollar Index has hit a new yearly high, and combined with high oil prices and persistent inflation, none of his three entry conditions have been met. He now expects the US dollar to peak between February and March next year, with the end of the global rate hike cycle delayed until the Federal Reserve's meeting in April. Currently, risk assets are "too expensive to go long, but also difficult to short due to protective measures."
US Stock IPO Analysis | Juneng Technology (NENG.US): The "Middleman" in the Short Video Advertising Boom, How Long Can the Long-Tail Traffic Dividend Last?
After the fundraising scale was increased, the valuation of JN Tech grew by about 13%.
Nvidia reduces customer collateral size
Strategy Is Officially Out of MSCI: What It Could Mean for MSTR and Bitcoin
Crypto prices
More
