The Chinese yuan is expected to trade range-bound between 6.50 and 6.70 with a strengthening bias prior to US President Donald Trump’s visit to China set for November 8-10. The yuan’s implied volatility has been rising along with sliding risk reversal since late August, Scotiabank reported.
A neutral risk reversal has paved the way for the regulators to increase two-way flexibility in the yuan exchange rate. In addition, the CFETS RMB Index has remained steady amid bear-steepening UST yield curve and rising DXY Index.
It would open further upside for the USD should the DXY Index rally through the 94 resistance and the 100-day MA line.
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