Westpac analysts notes that the past month has seen USD/CNY largely mark time, near CNY6.72 as progress reportedly continues to be made in trade negotiations between the US and China, but intellectual property considerations remain a significant impediment to a long-term deal.

“More to the point, even if a deal is announced in the near term, the effect on the economy and currency is likely to be negligible, as the US is likely to only relent on current tariffs as China meets agreed milestones. Further, amid uncertainty, Chinese authorities value ‘stability’ in the currency. We look for USD/CNY to end 2019 at 6.80 and 2020 at 6.40.”