USD/CNH: A SURPASS OF 7.3500 COULD LEAD TO 7.3800 – UOB
USD/CNH could revisit the 7.3800 region once it clears 7.3500, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: While we expected USD to rise further yesterday, we were of the view that it “is unlikely to reach 7.3500.” In line with our view, USD rose, but it did not reach 7.3500 (high has been 7.3460). Upward momentum has slowed a tad, and while USD could reach 7.3500 today, any advance is viewed as a higher trading range of 7.3200/7.3500. To put it another way, USD is unlikely to break clearly below 7.3200 or above 7.3500.
Next 1-3 weeks: Our latest narrative was from two days ago (06 Sep, spot at 7.3100), wherein the risk for USD has shifted to the upside towards 7.3500. Yesterday, USD rose to a high of 7.3460. Despite the advance, upward momentum has not increased all that much. That said, a break of 7.3500 would not be surprising and would then shift the focus to 7.3800. In order to keep the momentum going, USD must stay above 7.3000 (‘strong support’ level previously at 7.2800).
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