USD/CNH extends decline as CNY fix hits 14-month low – OCBC

The USD/CNH continues to drift lower amid a softer US Dollar and a strong CNY fix, marking a significant depreciation. The People's Bank of China (PBoC) is guiding the Yuan along a controlled appreciation path, which is influencing the current exchange rate dynamics. Market participants are focusing on the policy differences between the PBoC and the economic momentum in the US, which is exerting pressure on the currency. The recent CNY fix has reached a 14-month low, showcasing the relative strength of the Yuan. This strength raises questions about export impacts and domestic economic policies. The market is responding sensitively, and traders should closely monitor upcoming developments. Currently, the movements in USD/CNH may be related to risk aversion and shifts in international investment liquidity. In the short term, the response of the forex market will depend on any further policy decisions from the PBoC and forthcoming US economic indicators, as these will significantly impact exchange rates.