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JPM: Balancing Cross Currents Of Cyclical Optimism & Worsening BoP On Reopening


J.P.Morgan note that “growth and sentiment have shifted in favour of CNY FX and we lower our year-end USD/CNY forecast from CNY7.20 to CNY6.75. In the near future, we are open-minded about the possibility that the recent CNY rally could have longer legs given room for further short-covering. However, the cross currents of negative carry and risks of further deterioration in BoP flows suggest that not all the CNY-negative factors will be neutralised this year. This underpins our preference to strategically fade the recent CNY TWI strength.”

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