📝 Remain Neutral In USD/CNY, See 6.75-95 Range: J.P. Morgan Strategy

The CNY remained largely stable throughout April, ticking up from 6.87 to 6.93 and ending the month at 6.92. Following the 25bp hike, our US economists think it was the last hike of the cycle, though one more hike in June is likely if economic activity remains robust and the situation with the banking system calms down. Meanwhile, we expect the PBOC will keep the policy rate unchanged for the rest of the year, pointing to continued unfavorable carry return of Chinese fixed-income assets. The gradual resumption of cross-border travel and softening merchandise exports demand point to narrowing current account surplus, a BoP fundamental drag on the CNY, though the growth differential between China and the US may provide some lift. In all, our FX strategists remain neutral on USD/CNY, expecting the range of 6.75-6.95 to broadly hold on the crosscurrent of domestic cyclical upside and lingering external drags. - J.P. Morgan Strategy