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USD/CNH trades around 7.02 on Tuesday after slipping below the 7.04 mark. Terence Wu, an FX strategist at OCBC Bank, now expects the pair to consolidate in the 7.00 vicinity. 

Key quotes

“State media in China is feeding the equities, dragging the rest of North Asian bourses higher. This further supports the risk-on sentiment across Asia.” 

“The USD/CNH broke through the floor at 7.0400/500, falling aggressively to 7.0100. For now, we expect some consolidation around the 7.0000 handle due to profit-taking.”

“Overall, we see this as a catch-up decline for the USD/CNH, after the RMB’s underperformance in the past weeks.”