CNY: Guided by the US-China trade talks – Westpac

Frances Cheung, analyst at Westpac, suggests that the next focus for the CNY is US-China trade headlines as the FOMC is out of the way now.

Key Quotes

“Mnuchin commented that FX was part of the trade discussion, but we do not expect anything explicit to be made on the direction of USD/CNY as this will be against the principal of FX reform. One-way FX movement is not in China’s interests.”

“On balance, the combination of an easing monetary policy backdrop and softening economic activities, but limited outflow pressure is likely to keep USD/CNY in the range of 6.69/6.80 near-term. We now expect the next Fed rate hike to come in June, instead of March. As such, upward pressure on USD/CNY triggered by USD strength is likely to be delayed.”