USD/CNY: 7 is the new floor – Nordea

Low-risk sentiment, capital outflows, and an uncertain growth outlook are all weighing on the CNY, as analysts at Nordea note.

Key quotes

“We see little room for risk sentiment and the growth outlook to improve before COVID-19 is contained. Hence, USD/CNY will likely continue trading above 7 until then.” 

“Should risk appetite worsen further, the PBoC will likely increase its support of the CNY, which it has done by means of a stronger daily fixing rate.” 

“As long as capital outflows are a concern, Beijing will not tolerate too sharp a yuan weakening.”