|

More pressure on the Yuan if China open ups symmetrically – TDS

Is China about to open up? If China opens up symmetrically it would once again put pressure on the services balance of China's current account, leading to more and not less pressure on the Yuan, according to economists at TD Securities.

China’s opening is not going to be a panacea for the global economy and markets

“In terms of markets impact if China opens up symmetrically i.e. allows more Chinese to travel outside of China and not just allows more inward traffic, it would once again put pressure on the services balance of China's current account, leading to more and not less pressure on the CNY. As such, we maintain our view of CNY underperformance both vs. USD and on a trade-weighted basis. Conversely, it would be positive news for the likes of THB, and other tourism related currencies in the region including SGD.” 

“For the rest of the world, clearly a full opening up and dismantling of zero-Covid, would bode well, especially if Chinese growth reaches 6-6.5% as noted above, but this is not our base case. Moreover, even if growth does ramp up, China's domestically-focussed stimulus, ongoing domestic structural constraints, and weaker trade means that China opening is not going to be a panacea for the global economy and markets.”

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.

GBP/USD flirts with 1.3400 after nearing 1.3300

The GBP/USD changed course after dipping with UK inflation data, and trades near the 1.3400 mark, as investors expect the Bank of England to deliver a 25 basis points interest rate cut after the two-day meeting on Thursday.

Gold maintains its positive momentum, trades around $4,330

The XAU/USD pair gained on a deteriorated market mood, trading near its weekly highs near $4,340. The bright metal advances with caution as market players await first-tier events in Europe and hte United States.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

Crypto Today: Bitcoin, Ethereum, XRP slide further as risk-off sentiment deepens

Bitcoin faces extended pressure as institutional investors reduce their risk exposure. Ethereum’s upside capped at $3,000, weighed down by ETF outflows and bearish signals. XRP slides toward November’s support at $1.82 despite mild ETF inflows.