USD/CNY to advance nicely towards 6.50 over next 12 months – Danske Bank
|A number of headwinds have piled up for China lately, which will likely postpone the recovery into the second half and require more easing measures. A recovery in H2 should give upside for Chinese stocks. Economists at Danske Bank also look for USD/CNY to turn higher as the Chinese trade surplus is set to come down.
Upside for stocks and USD/CNY
“The Chinese economy has been hit by three new headwinds from covid outbreaks, the Ukraine war and financial stress. We expect this to delay a recovery into H2. We expect more economic stimulus, as China needs to step harder on the gas to lift the economy out of the current slump. The China weakness will add a further drag on the global economy in coming months, not least on Europe.”
“In recent weeks, Chinese stocks have recovered some of the lost ground and our call is still for Chinese offshore stocks to end the year higher than they started (but admittedly, the uncertainty is higher than normal).”
“Following a year of CNY appreciation despite all the challenges hitting China, we believe USD/CNY will move moderately higher over the next 12 months.”
“We already see signs exports will slow this year and later in the year, imports should start to recover on the back of stronger domestic demand.”
“We look for a rise in USD/CNY to 6.50 in 12M from the current level around 6.36.”
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.