0304 GMT - Yuan appreciation is intact but the U.S. rate hike cycle will cap the pace, CGS International analysts say in a research note. Given China's manufacturing competitiveness, deepening yuan invoicing and hedging, and the currency's undervaluation based on purchasing-power benchmarks, the yuan could continue to be firm in the next two years, the analysts say. The dollar could move around 6.70-6.75 yuan, with the coming U.S. midterm election giving the greenback some support, they say. "We expect the rate gap to widen, as the inflation threat in the U.S. remains significant while China's onshore monetary and fiscal policy stay on the easing side," they say.