Renewed American-Chinese tensions and growth challenges are downside risks for the CNY relative to the USD. On the other hand, the PBoC is likely to continue to calm the market and provide a cap for the USD / CNY. Nordea analysts forecast the USD / CNY pair at 7.05 by the end of the year.
“Due to the slower than expected recovery in private consumption and the service sector, we are revising our GDP forecasts for this year and next year down to 1% and 8%.”
“The pandemic is already weakening the trade agreement, because China will have difficulty meeting the ambitious import demand. A resumption of trade frictions before the pandemic is brought under control and the economy is on the right track for recovery could trigger a new liquidation of the CNY. ”
“Beijing has its hands full on the economy and is probably not interested in the return of the trade war. But his need to show strength nationally and globally means he won’t fall apart if Trump steps up the pressure. ”
“While the chilling relationship with the United States poses a significant downside risk to CNY relative to the USD, the PBoC, acting as a line of defense for CNY, should cap the USD / CNY. “
“USD / CNY spot 7.13 3M 7.15 Mid-2020 7.10 End 2020 7.05 End 2021 7”