UBS forecast USD/CNY to reach 7.5 by June this year:
- while growth is expected to accelerate in China, effective tariff rates could rise dramatically and be a headwind
- CNY has only partially priced in this
On the other side, UBS see continued US dollar strength.
- US activity likely to stay robust, economic data is likely to stay strong in the near term
- ongoing tariff worries for the rest of the world, if new tariffs are introduced, the US dollar could appreciate further
- US dollar to stay stronger for longer
- expect the Fed to cut for a total of 50bps of easing, in 2Q and 3Q
