The market mood remains tepid amid Chinese economic growth concerns, despite the uptick in the country’s inflation. All in all, economists at MUFG Bank expect the USD/CNY pair to enjoy upside momentum on divergent monetary policy between China and US.
China growth concerns remain in focus
“The trade report revealed that both export and import growth came in weaker than expected as their annual rates of growth slowed to 19.3% and 28.1% respectively in July.”
“Softer than expected external demand becomes more of a concern at a time when market participants are fearful that domestic demand is already slowing and will take another hit from further COVID-related disruption in the near-term from the ongoing spread of the Delta variant.”
“A further loss of growth momentum will keep pressure on policymakers in China to provide more support. Our China analyst expects a further RRR cut. Headline inflation remained subdued at 1.0% in July leaving room for looser policy to support growth although producer price pressures were more elevated at 9.0%.”
“Overall, we continue to expect the renminbi to weaken modestly against the US dollar heading into year-end as policies diverge between the Fed and PBoC.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.