USD/CNH will peak near 7.2500 – CIBC

USD/CNH briefly traded above 7.2000. Economists at CIBC Capital Markets analyze the pair’s outlook.

Very slight downside relief to 7.2000 and 7.1500 in Q3 and Q4, respectively

USD/CNH will peak near 7.2500. 

Almost every week media reports that state banks are selling USD in the spot market to defend the onshore Yuan. Thereafter, we expect very slight downside relief to 7.2000 and 7.1500 in Q3 and Q4, respectively.

The Yuan will benefit from USD weakness, but less so than North Asian peers JPY and KRW.