USD/CNY likely to remain below 6.70 ahead of G-20 Hangzhou Summit

In the past sessions, both USD/CNY spot and fixing have risen noticeably along with an appreciating US dollar. But, either the spot or the fixing is expected to remain below 6.70 critical level ahead of the G-20 Hangzhou Summit that would take place during 4-5 September, noted Scotiabank in a research report.

According to the PBoC’s statistics and analysis department head Sheng Songcheng, the People’s Bank of China would keep the yuan stable in the second half of 2017. It is quite unlikely that the yuan would depreciate largely in the near term or in the longer period of time.

As mentioned earlier, the US dollar tended to gain when nearing important events and major FOMC meetings in 2016 given the lingering concerns regarding likely alterations in the US Fed’s stance, stated Scotiabank. The recent appreciation in dollar is mainly because of the hawkish commentary from top officials of the US Fed.

Moreover, the US dollar usually pared its gains after the key events and FOMC meetings this year. Furthermore, certain regional currencies such as the Korean won and Taiwanese dollar are not overbought anymore now according to the RSI Index.

“While USD/TWD could rise further ahead of Fed Chair Janet Yellen’s speech at Jackson Hole Symposium due on Friday, the pair is less likely to break above 32.175 resistance level. We expect USD/TWD to reverse part of its gains post the Symposium unless Yellen strongly hints a rate hike in September”, added Scotiabank.