USD/CNY Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and lacks a clear driver for a significant shift.
Key drivers:
- The Federal Reserve is expected to cut interest rates, which typically weakens the USD against the CNY.
- China's central bank is actively stabilizing the yuan with measures that could support its value in the long-term.
- A recent report showed China’s economy growing faster than anticipated, contributing to positive market forecasts for the yuan.
Range: Movement is likely to hold steady within the recent range, as both currencies face opposing pressures that encourage a stable exchange rate.
What could change it:
- Upside risk: A stronger-than-expected U.S. labor market report could lead markets to reassess Fed rate cuts, boosting the USD.
- Downside risk: Continued government stimulus in China that significantly improves growth could put further upward pressure on the CNY.
