USD/CNY to reverse course and head lower toward year-end forecast of 6.70 – MUFG

USD/CNY is back closer to the highs from last year when it briefly traded above the 7.20 level last autumn. Economists at MUFG Bank discuss the pair’s outlook.

PBoC is now being more proactive to support growth

Our forecast for USD/CNY to reverse course and head lower to our year-end forecast of 6.70 is based on our view for a broad-based sell-off for the US dollar in response to building expectations for the Fed to cut rates, and our outlook for growth in China to strengthen during the second half of this year. 

We are encouraged that the PBoC is now being more proactive to support growth and expect more stimulus both monetary and fiscal to be provided in the coming months.