China is expected to tighten its control over the outflows of capital, by including renminbi cross border business into its macro prudential assessment of country’s financial system according to report from a local newswire. Also, the People’s Bank of China (PBoC) is likely to continue its action of stabilizing the RMB index amid dollar strength even at the expense of predictability of RMB fixing.

In a relatively quiet week, investors are eyeing the movement of the RMB, after the USD/CNY finally broke 6.9. The central bank published its official press statement in reaction to the recent RMB movement following Trump’s victory. PBoC deputy Governor Yi Gang reiterated that RMB should be observed from the perspective of currency basket instead of simple bilateral exchange rate relationship. 

With the increasing influence of CNH on CNY, the persistent weakness of CNH has weighed down the sentiment in the onshore market. The latest regulation change if confirmed may be at the expense of RMB internationalization. Nevertheless, between RMB internationalization and financial stability, it seems that the latter is more important at the current stage, OCBC Treasury Research reported.

Meanwhile, the USD/CNY has almost formed a bearish Marubozu candlestick pattern at 6.92, down 0.01 percent, with the following support (S1, S2 and S3) and resistance (R1, R2 and R3) respectively:

S1: 6.9187, S2: 6.9177 and S3: 6.9156

R1: 6.9218, R2: 6.9239 and R3: 6.9249