According to Frances Cheung, head of macro strategy of Asia for Westpac, USD/CNY pair is likely to be range bound in the coming weeks, with 6.8039 being the next support and 6.9771 the next resistance.
Key Quotes
“The MLF (medium-term lending facility) maturity schedule remains heavy in the coming months. An RRR cut to release some liquidity by year-end is still possible. If that does not materialize, we will be watching out for January, before the Chinese New Year.”
“We expect a total of 200bp RRR cut through end-2019. This is likely to keep CNY rates and yields soft and may exert a mild upward pressure on USD/CNY. That said, USD/CNY is likely to be capped below 7.0, as the Chinese authorities have shown willingness to contain RMB weakness, while inflows versus outflows pressure appear roughly balanced.”
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