CNY: What’s been driving a stronger renminbi?

The main economic data release overnight was the latest CPI report from China for July, MUFG FX analyst Lee Hardman notes.

USD/CNY rises back towards the 7.1800 level

“The report revealed that headline inflation picked up modestly by 0.3 points to 0.5% in July. The core measure on inflation fell to 0.4% in July from 0.6% in May-June. The release of the latest PPI report revealed that producer price deflation continued as it fell by an annual rate of -0.8% in July. Overall, the inflation developments alongside the recent loss of growth momentum in Q2 will keep pressure on the PBoC to lower rates further his year.”

“The renminbi has given back some of its recent gains over the past week. After hitting an intra-day low of 7.1153 om 5th August, USD/CNY has since risen back towards the 7.1800-level. The renminbi has benefitted alongside the yen and other Asian currencies from the recent bout of position liquidation as popular short positions have been pared back.”

“It has meant that the renminbi has strengthened following the PBoC’s decision to cut rates further towards the end of last month. While yields in China have continued to fall over the past month, it has been more than offset by the larger drop in US yields as market participants have moved to price in a higher probability of more aggressive Fed rate cuts.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.