It is very interesting to see that on meeting our upside target for the yuan-US dollar exchange rate of January’s high, observed volatility remains subdued and volumes are less than half of what they were in May. Similarly, though fractionally overbought on the RSI, bullish momentum is also fairly weak. These apparently conflicting signals suggest that rather than reaching a high, it is merely continuing in what has been a steady rally since early April. Weekly and monthly closes above 6.595 ought to help an MACD that has only recently turned positive, suggesting a rally to the 6.666 area and probably 6.7255. But the fact that the MSCI has again decided not to include Chinese equities in any of its indices should not unduly affect the exchange rate.