China is expected to announce controls over overseas direct investment (ODI) in the near term, aimed at alleviating the depreciation pressure on the yuan and preventing one-way expectations of the yuan depreciation from emerging and spreading, according to news reports from Bloomberg, citing the State Council of the Chinese Cabinet.

China’s total non-financial ODI rose 53.3 percent to CNY 961.93 billion (USD 145.96 billion) in the first ten months of 2016 from the same time a year earlier. According to an estimate, the nation may have lost USD577 billion in the period of January to October this year. On the other hand, China is anticipated to continue to encourage capital inflows in the year ahead.

However, the nation will adhere to ODI management policies that allow enterprises to be the principal subjects, follow market principles, conform to international practices and follow the government's direction, according to a statement jointly released by the NDRC, Ministry of Commerce, the PBoC and the SAFE on Monday.

"We believe an orderly yuan depreciation versus the dollar is in the authorities’ interest. Moreover, maintaining financial stability will be China’s priority next year in our view," Scotiabank commented in its latest research report.

Meanwhile, the USD/CNY has formed a bearish engulfing candlestick at 6.90, down 0.14 percent and is indicative of a near-term bearish trend.