In China, the deteriorating outlook for exports adds to the outstanding woes of poor local demand. Economists at Credit Suisse expect USD/CNH to hit the 7.35 mark.

CFETS Index should weaken more as exports decline

“We think exports and the CFETS Index will weaken due to low US/Europe demand. As such, we re-entered long USD/CNH with a target of 7.35, and forecast a wider trading range of 7.00-7.45 for Q4.”

“For the 20th Communist Party Congress, we expect the new cabinet to continue avoiding ‘floodstyle’ stimulus. Similarly, lifting covid restrictions will only be done gradually, in 2023 at the earliest.”

“We expect President Xi’s policies of covid restrictions and ‘housing is for living, not for speculating’ to continue. That means consumption and investment activity will likely remain weak in Q4.”