USD/CNY looks south towards 6.25 in Q2 – HSBC

Dhwani Mehta FXStreet

Analysts at HSBC raised their forecasts on the Chinese yuan, as they see the currency strengthening more than expected recently.

Key quotes

“Q2 6.25 vs. prior forecast at 6.5, Q3 6.45 vs. 6.5 previous. “

“By end-2021, USD/CNY will revert to 6.6.“

“Net FX inflows to China have moderated slightly YTD.”

“Expect this narrowing trend to continue and to quicken in 2H and 2022.”

"China is unlikely to deliberately strengthen the RMB so as to curb rising import costs."

"The recent surge in commodity prices is partly supply-side driven, rather than due to China's demand."

"The Fed may be patient about rate hikes, but it will have to taper its asset purchases eventually."

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.