USD/CNY likely to rally through 6.40 level in wake of June FOMC meeting, says Scotiabank

The USD/CNY currency pair is expected to rally through the 6.40 level in the run up to the Federal Open Market Committee’s (FOMC) monetary policy meeting in June, according to a recent report from Scotiabank.

Further, the United States’ dollar index is expected to remain supported given a surprise fall in the Eurozone inflation and a moderation in the bloc’s economic growth.

Meanwhile, China will prevent the yuan from depreciating sharply as Chinese Vice Premier Liu He who is also President Xi Jinping’s top economic adviser will visit Washington next week for follow-up trade talks to avert a trade war. The yuan is anticipated to outperform the CFETS basket amid ongoing external uncertainty.

"In our opinion, one-way speculation on the yuan exchange rate has dissipated as onshore USD/CNY spot has been persistently trading around the central bank’s daily reference rate," the report added.

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