To continue falling below 7.00 – DBS

USD/CNH should extend its fall below 7.00 following last week’s 0.9% decline to 6.9815. The pair was last seen at 6.9952, DBS FX analyst Philip Wee notes.

Additional fiscal measures are expected

“The CSI 300 Index surged 15.7% last week, its best weekly performance since November 2008, on China’s most significant monetary stimulus package since the Covid-19 pandemic to support the property sector and shore up capital markets.”

“Additional fiscal measures are expected as China seeks to achieve its 5% growth target. An announcement is likely before the National People’s Congress meeting in the second half of October.”

“The US Treasury Department welcomed last week’s stimulus measures but emphasized the need for increased domestic demand over reliance on exports.”