Market volatility in the USD/CNY has intensified in both directions. Economists at Société Générale expect the pair to peak out in the third quarter.
Moderate upside risk to USD/CNY
“We maintain a moderate upward bias to the currency pair at 6.8src for Q3, but expect it to pull back from 6.8src in 3Q to 6.6src in Q4 as covid-related economic disruption eventually dissipates.”
“There are factors that should keep the USD/CNY high until Q3. First, monetary policy in the US and China is set to diverge further. Second, China’s export momentum should fade as saturation is reached, leading to a smaller trade surplus ahead. Third, current market expectations are for weaker US consumer spending and lower US asset prices.”
“Subdued US consumer growth could eventually have a ripple effect on EM assets, including in China. We also doubt that US tariff reductions would be a viable option for US authorities.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.