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The TD Securities (TDS) Analysts believe that the USD/CNY pair will surpass the key 7.00 level, in the wake of the US tariffs impact on the Chinese economy.

Key Quotes:

“7.00 level will be allowed to eventually fall if seen as fundamentally necessary.

Considerations regarding the need to adjust against tariff impact as well as preserve FX reserves against much higher external debt levels should dominate China’s priorities.

Remain bearish CNY, seeing the need for further macro adjustment, and the risk that additional U.S. actions drag on China’s economy, during a drawn-out trade war.

Continue to see 7.20 achieved in the coming months (though the near-term defense of 7.00 may delay that).”