We look for USD/CNY to move broadly sideways over the next 12 months as two opposing forces are in play: 1) Our expectation of more overall USD weakening speaks in favour of more downside in USD/CNY. 2) In the other direction, we look for a slowdown in China and US rates moving in favour of the USD relative to the CNY.
We expect EUR/CNY to continue the trend higher. This is a reflection of our forecast of stronger EUR vs USD and broadly flat USD/CNY. We recommend to hedge CNY receivables for EUR based entities.
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