DB says a Biden win in the US presidential election will be yuan positive.
- would lead to a weaker USD/yuan
- irrespective of which party controls the Senate
If Biden wins but the Senate stays in the hands of the Republicans
- result is less aggressive fiscal policy
- but likely places more pressure on Fed to ease again
- thus meaning more pressure for CNY strength
If Biden wins and Senate majority switches to Democrats:
- would result in larger fiscal stimulus
- which would weigh on USD/yuan
- also would boost EUR and yen
"If China and the US still embrace the 'decoupling' momentum set in train by Trump, this is negative for USD reserve accumulation and enhances the spillover from USD/CNY onto strength in other reserve currencies"
A Trump win:
- initially more USD/CNY support
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Via a DB overnight note (Tuesday Europe time)