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Investing.com - UBS has issued a new forecast for the USD/CNY exchange rate, projecting the Chinese yuan will strengthen approximately 3% against the U.S. dollar over the next 12 months.
The Swiss banking giant predicts the USD/CNY will reach 6.95 within the next year, representing a notable appreciation from current levels. This outlook comes as U.S.-China trade talks have yielded another extension of the tariff truce until early November.
UBS analysts note that targeted policy support measures may soon be implemented to bolster China’s slowing economy, potentially providing additional stability for the yuan. The bank also sees continued upside potential in Chinese technology stocks, citing improving fundamentals and robust market liquidity.
Fed Chair Powell’s recent dovish speech at Jackson Hole has reinforced UBS’s expectation of a September interest rate cut by the Federal Reserve. This anticipated policy shift aligns with broader market expectations for U.S. monetary easing in the coming months.
The bank recommends quality bonds to secure durable income in the current environment, suggesting investors position themselves for the expected changes in monetary policy and currency valuations.
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