Yuan is all energized against the USD,
- After consolidating in a tight range (6.73-6.81) against the USD over the past five weeks, USD/CNH is sharply heading lower this week to test the lowest level (6.70 per USD) since September last year.
- The current broad-based weakness in the USD coupled with optimism over Sino-American trade negotiations is fueling Yuan’s ride.
- The momentum strongly suggests that yuan would not only test the above-mentioned level but break lower to reach as high as 6.61 per USD.
- The sharp drop in consumer spending in December in the United States is weighing on the USD, However, we remain bullish on the USD over a longer horizon and expect the current weakness to be temporary.