USD/CN to peak out at 6.80 in Q3 – SocGen
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 6.80 for Q3, but expect it to pull back from 6.80 in 3Q to 6.60 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.”
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FXStreet Insights Team
FXStreet
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