China's offshore yuan, CNH, trades to its strongest against the USD since February 2023
At a Glance
The desk interprets the recent strength of the offshore yuan (CNH), which has reached its highest level against the USD since February 2023, as a significant market signal. Per the full note source, the CNH traded at 6.8401, marking a notable recovery since March 24, 2023. This movement may reflect strategic positioning ahead of geopolitical dialogues, particularly with the U.S. The consensus target for CNH remains at 1.075, with a range between 1.04 and 1.12, indicating a cautious but optimistic outlook among traders.
Full Analysis
What the desk is arguing
The desk frames this as a pivotal moment for the offshore yuan, suggesting that its appreciation may be part of a broader strategy to influence U.S. policy discussions. The recent print of 6.8401 against the USD is the strongest since early February, indicating a potential shift in market sentiment towards the CNH.
This strength comes amid ongoing economic adjustments in China, where policymakers are likely keen to stabilize the currency to support trade and investment flows. The desk notes that such movements can often precede important announcements or policy shifts, particularly in the context of U.S.-China relations.
Where it sits in our coverage
Our consensus target for the CNH is 1.075, with a range from 1.04 to 1.12. Key firms contributing to this view include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective aligns closely with jpmorgan, which is positioned at the upper end of the range, while bofa holds a more conservative stance. The desk's call reflects a slightly more optimistic outlook compared to the broader consensus.
How other firms see it
Firms such as jpmorgan and citi are aligned in their bullish outlook on the CNH, anticipating further appreciation against the USD. Conversely, bofa remains cautious, citing potential headwinds from U.S. monetary policy tightening.
Traders should also monitor the USD/JPY trajectory, as shifts in U.S. interest rates could have spillover effects on the CNH. Additionally, the PBOC's policy decisions will be critical in shaping market expectations moving forward.
What the calendar says
...
From the original
Earlier: 6.8401 is the strongest setting for CNY since March 24, 2023 The offshore yuan has now hits its highest since 9 February 2023. Probably some messaging to Trump in this ... This article was written by Eamonn Sheridan at investinglive.com.
Related speeches
4 itemsPBOC sets USD/ CNY reference rate for today at 6.8562 (vs. estimate at 6.8160)
The PBOC's recent reference rate setting for USD/CNY at 6.8562 marks a significant shift, being the strongest level since March 24, 2023. Per the full note from Eamonn Sheridan at investinglive.com, this rate exceeds market estimates of 6.8160, indicating a potential tightening of the yuan's value. The desk interprets this as a signal of the PBOC's intent to support the yuan amid ongoing economic pressures. With the central bank allowing fluctuations within a +/- 2% range, traders should closely monitor the implications for broader FX dynamics.
CNY at a glance: tightening our forecast band for rest of 2026
The desk's core thesis is that the CNY's recent performance in 2026 is noteworthy, prompting a forecast band adjustment to 6.67–6.92 for the year. Per the full note from ing-think, this adjustment is attributed to the CNY's resilience against the USD during a period of geopolitical turmoil and a stronger dollar backdrop, showing gains even when the USD has otherwise strengthened. Notably, the recent bullish sentiment among market participants could increase demand for the CNY, which the desk views could be tested in the coming months as external conditions evolve, particularly related to US interest rates. With no high-impact calendar events imminent, traders should strategize based on ongoing dollar dynamics and potential positioning shifts prevalent in the market.