In their latest note, the firm says that they do not expect the offshore yuan to strengthen beyond 7.00 per dollar in the near-term. However, they do see the potential for recent gains in the currency to run further.
"There has been continued inflows into CNH from both leveraged and real money community in recent weeks but we do not expect a material risk of long USD/CNH positions unwinding. The caveat for any significant yuan strength pushing USD/CNH below 7.00 is "if market prices in a deal with tariff rollback", which the firm concedes as being unlikely for now.
They add that they are "skeptical of a comprehensive trade deal before the 2020 election".
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