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“Recent negative growth surprises and the proximity of 7.00 in USDCNY have focused the market back on China,” notes  Sacha Tihanyi, Deputy Head of Emerging Markets Strategy at TD Securities.

Key quotes

“We expect further growth deterioration, as monetary and fiscal policy responses have incremented in urgency over the past two months.”

“We see negative data surprises, particularly in trade data, as a catalyst for further sharp CNY weakness via stoking expectations for nominal and real effective CNY easing.”

“We continue to see 7.10 in USDCNY by year-end, and weakness into the new year for the renminbi, as the PBoC manages the pace of depreciation, but defends no level outright.”