Bias: Bearish-to-range-bound, as the USD/CNY is currently below the 90-day average and within the lower half of its 3-month range.
Key drivers:
• Rate gap: The U.S. Federal Reserve is expected to cut interest rates while the People's Bank of China maintains support for the yuan, mixing the outlooks for both currencies.
• Risk/commodities: Recent declines in oil prices may affect global economic stability, which in turn can impact demand for the USD against the CNY.
• One macro factor: China has reported stronger-than-expected economic growth, which could bolster the yuan as tensions ease.
Range: The USD/CNY is likely to hold steady within its recent range, with potential fluctuations driven by economic news.
What could change it:
• Upside risk: Strong economic data from the U.S. could lead to a rise in the USD.
• Downside risk: Further deterioration in U.S.-China relations could weigh on the yuan.