A note via JP Morgan on FX strategy. In it, JPM argue that while an improvement in economic growth in China should come from additional fiscal policy assistance and the gradual policy easing that has been in place since August, and hence the bank has revised its forecast for GDP growth higher, the policy moves have not prompted significantly restored foreign inflows.

On the CNY therefore, JPM say that the Fed rate decision and the PBOC's FX policy are still at the forefront for CNY moves:

  • Fed will likely remain on hold at its next meeting and for the first part of the next year

On China, JPM expect a 25bp RRR drop before year-end due to the recent addition of the 1 trillion special CGB added to this year's budget

  • and anticipate that the policy rate will stay steady in the near term
  • we think the latest developments point to less bearishness on CNY FX


Offshore yuan, USD/CNH, update:

usdcnh update chart 15 November 2023