Chinese Yuan: Uptrend against US Dollar intact amid trade surplus – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad reports that USD/CNH is falling toward support at its June multi-year low as broad Dollar weakness combines with China’s stronger-than-expected trade surplus, driven by AI-related exports and semiconductor imports. Haddad argues that continued CNY appreciation could aid China’s shift toward consumption and concludes that the USD/CNH downtrend remains intact.
AI trade strength and CNY appreciation
"USD/CNH is down on broad USD weakness, and nearing support at its June multi-year low of 6.7581. China’s May trade surplus widened more than expected powered by the AI supply chain."
"The trade surplus increased to a four-month high at $105.4bn as exports surged 19.4% y/y and imports soared 27.4% y/y, both well above consensus."
"Strong global demand for AI-related goods boosted shipments while import growth was driven by a surge in semiconductor imports. On an annual basis, China’s trade surplus remains massive at $1.17 trillion."
"In our view, a continued appreciation in China’s currency could help the country shift its growth model towards consumer spending by boosting disposable income through cheaper imports. Bottom line: USD/CNH downtrend is intact."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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