USD/CNY to recover towards 6.95 in one-to-three months – Danske Bank

A weaker USD is pushing the USD/CNY pair lower, trading just above the 6.90 level, but economists at Danske Bank expect USD/CNY to rise toward 6.95 in one-to-three months and a further appreciation to 7.05 on a six-to-twelve month horizon. They also see risks broadly balanced for the USD/CNY cross.

Key quotes

“Given that we expect a slight rebound in USD in the coming month, we expect some slight upward pressure on USD/CNY near-term, we look for USD/CNY to increase to 6.95 on one-to-three months followed by an increase to 7.05 on six and twelve months as we expect the USD to strengthen further on this horizon.” 

“On the upside, the US-China trade war could flare up again or the US could put sanctions on China that raise fears of a new tit-for-tat economic war. On the downside risk for the cross are strong global expansion and Joe Biden winning the US presidential election.”