USD/CNY: Renminbi rally to continue in the near-term – MUFG

USD/CNY is trading just below the 7.00 level and analysts at MUFG Bank expect the Chinese currency to strengthen despiste of a mixed outlook due to risks regarding US-China tensions and doubts about the economic recovery.

Key quotes

“An uneven economic recovery among different sectors, especially within the services sector and the rising geopolitical tension between the US and China; we see a mixed risk signals but the risk-on rally for CNY against the US dollar in the near-term looks set to continue.” 

“Should the risk factors cause the market participants to put its risk-off hat on, CNY will quickly move towards the 7.1000 level to test the resistance around that level.”

“While global risk factors will be important for CNY direction, a better macro backdrop in China would be important for near-term CNY direction and like markets more generally lots of good news appears in the CNY price.”