Trend of U.S. dollars to RMB comment September 6, 2010
USD/CNY to be moderately bearish, tracking broad USD weakness after Friday''''s US Aug nonfarm payrolls not as bad as expected: data suggest US will avoid double-dip recession, boosting risk appetite. DJIA extended winning streak to 4 days, up 1.24%, with EUR/USD ending week on firm note touch below 1.29. Breakdown of China''''s FX reserves shows USD still makes up roughly 65%: could be bearish for USD/Asia FX in months ahead as more diversification in cards. Yet with China continuing to control USD/CNY within narrow range, other Asia FX may outperform should USD weakness continue in days ahead. Dow Jones technical analysis shows USD/CNY has immediate support at 6.7965 (Aug 30 low), then at 6.7859 (Aug 20 trough). Initial resistance at 6.8222 (June 22 peak), then 6.8322 (June 17 high).
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