USD/CNY: Near-term weakness remains ahead of monetary policy moves – ING

USD/CNY
weakened
over
the
past
month
from
around
7.25
to
7.27.
Another
month
of
soft
data
has
increased
the
odds
of
easing
in
the
next
few
months,
ING’s
FX
analysts
note.

USD/CNY
weakens
in
the
past
month

“USD/CNY
weakened
over
the
past
month
from
around
7.25
to
7.27,
reflecting
capital
outflows
amid
market
weakness
and
broader
dollar
strength.
The
People’s
Bank
of
China
(PBOC)
usage
of
the
counter-cyclical
factor
hit
a
new
high
in
July.”

“Another
month
of
soft
data
has
increased
the
odds
of
easing
in
the
next
few
months.
However,
the
PBOC
also
announced
it
would
start
borrowing

bonds
to
sell
and
try
to
cool
the
government
bond
rally.
The
net
impact
on
yields
is
unclear.”

“We
are
adjusting
our
CNY
forecasts
weaker
as
yield
differentials
will
remain
unfavourable
until
the

Fed
starts
easing.”