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  • Yuan extends the 2020 rally to hit a 31-month high. 
  • The Chinese currency has gained over 1% in the first two trading days of the year.

The Chinese yuan (CNY) has begun the new year with a bang, rising to fresh multi-year highs against the US dollar. 

At press time, the yuan is trading at 6.4311, the highest level since June 2018. The currency has gained nearly 1.5% in the first two trading days of the year, having rallied by 6.27% in 2020. 

The Chinese unit’s ascent seems to have accelerated with the penetration of last year’s resistance of 6.52.  

The currency continues to benefit from China’s economic recovery, the twin US fiscal deficits, and expectations that the Federal Reserve would keep the interest rates low despite hopes for coronavirus vaccine-led recovery. 

Further gains may be seen if the US Democrats sweep Georgia elections on Tuesday, taking control of the Senate. That outcome is expected to pave the way for additional fiscal stimulus. 

Technical levels