USD Weakness Against Chinese Yuan (CNH): A Detailed Analysis
The foreign exchange market has been witnessing some intriguing movements, with the US Dollar (USD) showing signs of weakness against the Chinese Yuan (CNH). UOB Group’s FX analysts, Quek Ser Leang and Peter Chia, have weighed in on this trend, offering some valuable insights.
Short-Term Outlook: Lower Range of 7.2400/7.2800
According to Quek and Chia, the further decline of the USD against the CNH is not an impossible scenario. However, any such decline is likely to occur within a lower range of 7.2400 and 7.2800.
Long-Term Pressure on USD
Looking beyond the short term, the analysts believe that the USD could remain under pressure against the CNH. This trend is primarily due to the ongoing US-China trade tensions and the divergent monetary policies of the two countries.
Strong Supports at 7.2400 and 7.2260
Despite the overall bearish outlook, it’s important to note that the USD still has some strong supports. These include the psychological level of 7.2400 and the more significant support at 7.2260.
Personal Impact: Potential Savings on Chinese Imports
For individuals, a weaker USD against the CNH could translate to savings when importing goods from China. This is because a weaker USD makes Chinese goods relatively cheaper for US consumers.
Global Impact: Trade Balance and Currency Wars
On a larger scale, a weaker USD against the CNH could impact the global trade balance. Some analysts argue that it could lead to a currency war, as countries devalue their currencies to make their exports more competitive.
Moreover, a weaker USD could potentially lead to an increase in US imports, which could further widen the US trade deficit.
Conclusion
In conclusion, the USD’s weakness against the CNH is an ongoing trend that shows no signs of abating soon. While there are strong supports for the USD, the overall outlook remains bearish. For individuals, this could mean savings on Chinese imports. For the global economy, it could lead to a shift in trade balances and potential currency wars.
As always, it’s essential to keep a close eye on these currency movements and their potential impacts on your personal finances and the global economy.
- A weaker USD against the CNH is a trend that’s likely to continue.
- Strong supports for the USD are at 7.2400 and 7.2260.
- A weaker USD could lead to savings on Chinese imports for individuals.
- On a global scale, it could lead to trade imbalances and potential currency wars.
