OCBC’s Christopher Wong observes that Renminbi (RMB) appreciation guidance is waning, with CNH-CNY fixing gaps narrowing and daily adjustments moderating. Policymakers appear to be shifting toward RMB stability rather than further appreciation. As a result, USD/CNH may become more driven by the broader Dollar, yield differentials and China growth sentiment, leaving downside less anchored.

Stability focus shifts USD/CNH drivers

"The RMB appreciation impulse appears to show tentative signs of losing some official reinforcement. The CNH-CNY fixing gap has narrowed, while the pace of daily fixing adjustment has moderated."

"Recent fixes have also been less RMB-supportive versus market expectations (Bloomberg proxy), suggesting that the policymakers may be shifting back toward RMB stability management rather than guiding for further appreciation."

"If fixing guidance continues to fade, then RMB direction may potentially become more dependent on the broader USD, yield differentials and China growth sentiment."

"This can potentially mean that the downside path of USD/CNH may be less anchored. We flag this as a risk and will continue to monitor"

"USDCNH last at 6.8060 levels. Mild bullish momentum on daily chart intact though RSI is flat. 2-way trades likely. Resistance 6.8110 (23.6% fibo retracement of 2026 high to low), 6.83 (100 DMA). Support at 6.7910 (50 DMA), 6.7880 (21 DMA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)