USD/CNY to trade within the 6.70-6.80 range near-term – Commerzbank

China’s inflation report for July was acceptable and showed few signs for concern. USD/CNY is flat on the data. Economists at Commerzbank expect the USD/CNY pair to move within the 6.70-6.80 range near-term.

Generally good news on inflation

“CPI picked up to 2.7% YoY. Core inflation, which excludes food and energy, remained subdued at 0.8% YoY in July and averaged just 1% year-to-date (YTD).”

“Headline inflation is just 1.8% YTD and well below the government’s target of 3% set earlier this year. If anything, there was in fact some good news with PPI inflation slowing to 4.2%. It is expected to moderate further for the rest of the year owing to the highest base in H2 last year.”

“For CNY, it is still in a wait-and-see mode and PBoC may be content to let it continue to trade within the 6.70-6.80 range near-term.”