Scenarios for bearish CNY:
(1) Fed hikes more aggressively this year, thus driving a higher DXY and selloff in major non-USD currencies
(2) Downside risk in China’s growth accelerates, raising a worry on growth slowdown and capital outflows
(3) Unexpected weakness in Euro or JPY, pushing a broad Asian currency weakness vs dollar
Scenarios for bullish CNY:
(1) Lower-than-expected recovery in US economy and Fed postpones rate hike, leading to a rally of non-USD currencies against dollar;
(2) Growth momentum and trade surplus in China pick up in 2016, diminishing expectation on CNY depreciation;
(3) Stronger than expected USD/CNY fixing.
Macroeconomic data radar:
US payroll each months
FOMC meetings and decisions on benchmark interest rate
USDCNY fixing and spot moves
Chinese PMI, export and trade surplus, IP each month
Move in USDJPY, EUR, KRW may have cyclical effects on CNY.
