The Chinese Yuan extends recent decline and hits a new 2-year low today. This comes on the back on broad based strength in Dollar, on expectation that Fed’s interest rate will stay high for long even after the current tighten cycle finishes. On the other hand, Yuan’s weakness is also driven by weaker than expected economic data and rate cut by PBoC. China’s PMI data to be released later in the week, and US non-farm payroll, could trigger even steeper selloff in Yuan against the greenback.
USD/CNH’s up trend resumes today and hit as high as 6.9323 so far. Outlook will stay bullish as long as 6.8459 support holds. Next target is 61.8% projection of 6.3057 to 6.8372 from 6.7159 at 7.0444. A question is whether there would be intervention by the Chinese authority above the 7.0000 mark.
