USD/CNY to advance nicely towards 6.70 in the next months – Danske Bank

USD/CNY has broken above the 6.50 handle. Economists at Danske Bank expect the pair to extend its rise and reach the 6.70 level over the next 12 months.

See: USD/CNH to edge higher towards 6.5300 and 6.5520 – SocGen

More hawkish Fed the trigger for a turn higher

“We continue to look for USD/CNY to move gradually higher over the next 12 months and have not changed our profile towards the 12M forecast at 6.70.”

“With the overall USD strengthening and ongoing policy divergence (PBoC easing, the Fed tightening) downside pressure remains on CNY vs. USD.”

“We still look for EUR/CNY to be around 7.70 on 12M, slightly higher than the current level of 7.63.”

“The main risk is USD/CNY rising stronger than we forecast and EUR/CNY being lower as more policy easing than expected could be necessary for PBoC.”