Commerzbank Economist Hao Zhou believes that Fed rate hike pause would help China defend the psychological level of 7.00 in USD/CNY.
Indeed, the Fed’s dovish stance would alleviate the bullish pressures around the greenback, capping the downside in the Chinese currency.
The Fed, however, is data dependent and could hike rates, something which markets aren’t expecting currently if the labor market and wage growth numbers continue to better expectations. In that case, the USD/CNY could move well past 7.00.
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