USD/CNH is gradually inching towards a potential hurdle of 6.5000. A break above here would clear the way towards the 6.5630 level, economists at Société Générale report.
Real estate group Evergrande fanning concerns of a harder landing
“The test whether the yuan is headed back over 6.50 will come in the coming days, starting tomorrow when markets in China re-open after the extended weekend, and then Thursday when the deadline passes for Evergrande to make coupon and bank loan payments.”
“We’ve been bemused by the resilience of the currency tactically to the downturn in the data as recently as last week, notwithstanding the anchor of the country’s current account surplus. The price action could repeat itself this week, but this time it could be contingent on whether the authorities can douse contagion fears for the broader Chinese economy.”
“A break above 6.5000 is essential to affirm a retest of recent peak at 6.5300 with possibility to reach 6.5630.”
“Consolidation above 6.4600 will be crucial for persistence in up move.”