USD/CNY to finish the year in the 7.00 level – ANZ


USD/CNY trading in a range (7.05-7.10) but could head modestly lower through H2 as a gradual economic recovery and a modest easing in monetary and fiscal policies will support the CNY, according to economists at ANZ Bank.

Key quotes

“Fears of a second wave of infection in China, heightened virus worries in the US, and bouts of US-China tensions have kept USD/CNY in a 7.05- 7.10 range for most of June. We expect USD/CNY to continue to fluctuate within a range, as concerns over the pandemic continue and US election-related rhetoric picks up in coming months.” 

“Amid volatility, we see a modest downside risk in USD/CNY through H2 2020. Principally, on the economic front, we expect a gradual recovery of the Chinese economy. Monetary and fiscal policies will remain supportive but measured. We continue to expect the PBoC to ease monetary policy modestly, with a further 20bp cut to 2.00% in the 7-day reverse repo rate and a 100bp cut in the reserve requirement ratio for large banks in H2. On the fiscal front, we do not expect deficit monetization in China.” 

“We expect the ‘unlimited’ quantitative easing of the US Federal Reserve, more so than in the aftermath of the GFC, to eventually take the USD down in the next two to three years. We expect USD/CNY to end this year at 7.00.” 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD tumbles to one-month low as ECB signals stimulus

EUR/USD has dropped below 1.17, to the lowest since late September. The ECB expressed concern about the spread of covid and signaled more stimulus in December. Earlier, US GDP beat estimates. The US elections are eyed.

EUR/USD News

GBP/USD tumbles below 1.30 as market mood worsens

GBP/USD has dropped below 1.30, reversing its Brexit-related gains. Growing concerns about coronavirus in the UK and the US elections are weighing on the pound.

GBP/USD News

Gold depressed near 1-month lows, below $1870 level post-US GDP

Resurgent USD demand prompted some fresh selling around gold on Thursday. The USD stood tall following the release of upbeat US third-quarter GDP report. The US economy expanded by 33.1% annualized pace as against 31% expected. 

Gold News

US GDP Quick Analysis: No V-shaped recovery despite 33.1% leap, covid looms over markets

The best quarter in history – following the worst one. Gross Domestic Product jumped by an annualized rate of 33.1%, above expectations. That included a surge of 40.7% in personal consumption, a core component of the economy. 

Read more

WTI collapses to $35.00, new 4-month lows

Prices of the WTI drops to 4-month lows near the $35.00 mark per barrel in the second half of the week as traders continue to track the unremitting advance of the coronavirus pandemic and its impact on the demand for the commodity.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures