- September 1, 2022
- Posted by: Stratford Team
- Category: Economy
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US Dollar, Chinese Yuan, USD/CNH, Fed, PBOC – Analyst Pick
- US Dollar has extended gains against the Chinese Yuan since June
- USD/CNH may keep its upward trajectory on fundamental factors
- These include Fed & PBOC divergence, China export estimates
Chinese Yuan Remains Vulnerable to Divergence Between the Fed and PBOC
In mid-June, I wrote an analyst pick warning about the fundamental forces that pose a risk to the Chinese Yuan. Since then, USD/CNH climbed about 3.5 percent, rising to 6.90 from 6.67. Following a period of consolidation, August was the best month for the exchange rate since April. Is there more room for the US Dollar to continue its upward trajectory? It seems so.
The fundamental premise remains largely the same. When it comes to trading currencies, ideally, we want to find pairs where central banks are the most divergent. In the case of USD/CNH, the Federal Reserve is clearly hawkish. Throughout the summer, traders priced in expectations of a…
