USD/CNY is trading just below the 7.00 level and analysts at MUFG Bank expect the Chinese currency to strengthen despiste of a mixed outlook due to risks regarding US-China tensions and doubts about the economic recovery.
“An uneven economic recovery among different sectors, especially within the services sector and the rising geopolitical tension between the US and China; we see a mixed risk signals but the risk-on rally for CNY against the US dollar in the near-term looks set to continue.”
“Should the risk factors cause the market participants to put its risk-off hat on, CNY will quickly move towards the 7.1000 level to test the resistance around that level.”
“While global risk factors will be important for CNY direction, a better macro backdrop in China would be important for near-term CNY direction and like markets more generally lots of good news appears in the CNY price.”
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