📝PBoC, Fed to Continue to Drive Yuan: J.P. Morgan FX Strategy

The incremental policy easing since August, upbeat 3Q GDP report and latest fiscal policy support have prompted us to revise up near-term growth forecast. But it has not meaningfully brought back foreign inflows, capping the growth impulse on CNY FX.

We think currently the PBOC􏰀s FX policy and the Fed rate decision remain at the forefront for CNY FX.

Our US economists continue to see the Fed on hold at the next meeting and on through the first half of next year. On China front, with latest addition of the 1 trillion special CGB to this year􏰀s budget, we have added one 25bp RRR cut before year end, but expect policy rate to remain unchanged in the near term. Overall, we think latest developments point to less bearishness on CNY FX.- J.P. Morgan FX Strategy