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Since late July AUD/CNY has spent time above 5.00, its strongest levels since Dec 2018. Economists at Westpac forecast the pair trading back to the 5.00 level while see USD/CNY moving between the 6.73-6.83 range.

Key quotes

“The AUD/CNY pair is positively correlated with optimism over the global recovery, even if China’s growth is a key source of that optimism, given A$’s greater flexibility. AUD/CNY should push back to 5.00-5.05 multi-week. But equities will continue to spark gyrations in AUD/CNY.”

“The yuan has been supported by the PBoC not opting for the ultra-expansionary monetary policy of most central banks and by global travel restrictions which shrink China’s services deficit. However, USD/CNY should consolidate in coming weeks, partly as US election uncertainty tempers yuan gains.”

“While we remain bullish RMB and expect USD/CNY to gradually move to 6.50 by end-2021, the pair is more likely to consolidate in the near-term, amid a few pressure points in the run-up to the US elections, and likely profit-taking flows. We expect a range of 6.73-6.83 on a multiweek horizon.”