USD/CNY: Forecasts lowered as China shows stronger determination to defend the Yuan – Danske Bank

Market news

27 October 2023

USD/CNY: Forecasts lowered as China shows stronger determination to defend the Yuan – Danske Bank

USD/CNY has continued to move broadly sideways. Economists at Danske Bank analyze the pair’s outlook.

Expectations of the pace of CNY weakening against USD lowered

As China has shown a stronger determination lately to defend the CNY and sentiment is already very weak, we have lowered our expectation of the pace of CNY weakening against the USD.

We have lowered the 6M forecast to 7.40 from 7.60 and the 12M forecast to 7.50 from 7.70. It is still around 2% weaker than what the forward market is pricing, though.

EUR/CNY has continued to move lower trading with a high correlation to EUR/USD again. The revision to our USD/CNY forecast translates into a lowering of the 6M forecast to 7.84.

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