USD/CNY fix was set lower at 7.0949 and below 7.10 for a 3rd consecutive session. USD/CNH last seen at 7.1280 levels, largely in line with yesterday spot despite the USD/CNY fix going lower, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks somewhat skewed to the downside

"This demonstrated policymakers’ intent to guide RMB on an appreciation path, albeit at a measured pace. There were also market chatters of explicit strengthening in the RMB ahead of the 4th plenum scheduled to be held in Beijing 20 – 23 Oct. The Central Committee of the Chinese Communist Party (CCP) will convene and focus on outlining CCP’s next 5-year plan from 2026-2030. Earlier in April, President Xi outlined 5 key areas including national economic development, security, innovation, education & talent for development of new quality productive forces and the improvement of people’s livelihoods."

"A communiqué is expected to be published on 23rd October, followed by the publication of the proposal of the 5-year plan a week later. CEWC will work on key policy targets in mid-Dec before the NPC meeting in March 2026. With US-China tensions still heightened over rare earth export controls and Trump’s 100% tariff threat in response, the strong CNY fix only served as restraining the CNY from weakening, for now."

"An improvement in market sentiments may still be required for spot to be aligned with the fix, from a directional perspective. Bullish momentum on daily chart is fading while RSI fell. Risks somewhat skewed to the downside. Support at 7.1150, and 7.08 (76.4% fibo retracement of 2024 low to 2025 high). Resistance at 7.1330 (21 DMA), 7.1420/60 levels (50 DMA, 61.8% fibo)."