- PBOC fix showed the central bank is more tolerant of Yuan drop.
- USD/CNH hit 7-month high of 6.6521.
The USD/CNH (offshore Yuan exchange rate) rose to 6.6521 a few minutes ago – the highest level since November 14 and was last seen trading at 6.6473.
The CNH likely ran into offers after the PBOC fix showed the central bank is becoming more tolerant of weak Yuan exchange rate.
The Chinese central bank was widely expected to put a floor under CNY by announcing a stronger fix.
However, the central bank set the Yuan midpoint rate at 6.6166 today vs. previous day’s fix of 6.5960, adding credence to the argument that weaker Yuan is China’s weapon of choice in a trade war with the US.
USD/CNH Technical Levels
Resistance: 6.6631 (Nov. 13 high), 6.6904 (Oct. 3 high).
Support: 6.6325 (Dec. 12 high), 6.6179 (Dec. 18 high).
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