China FX has front-loaded the China reopening and economists at Société Générale are cautious about chasing a CNY rally.

Neutral on Yuan

“As USD/CNY has already reversed more than 50% of the rise in 2022, it would be necessary to feed more positive surprises to the market to deepen a CNY rally to the 6.30 level, but we are sceptical.”

“Our year-end USD/CNY forecast of 6.80 incorporates a ‘gradual’ turnaround in major policies including Zero-COVID. However, nearly all major policies that were seen as negative to the market have been reversed in the past two weeks.”

“The FX market has selectively front-loaded the positive policy surprises and their future implications for the economy.”