USD/CNY seen higher in the next months – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, sees the pair edging higher in the next months.

Key Quotes

“While the broad-based USD gets the most attention, the move in USD/CNY is clearly the most significant move in currency markets over the last trading sessions”.

Yesterday, USD/CNH saw the third largest drop on record in what seems like a short squeeze, with China pushing up offshore money market rates to scare off bulls”.

“Also, it is worth noting that the CNYCNH spread has now turned negative, highlighting the magnitude of the USD/CNH move”.

“Fundamentally, we still expect USD/CNY (and USD/CNH) to move higher over the course of 2017, but we are likely to have to see a stabilisation in offshore money market rates to trigger a sustained rebound”.