MARKET OUTLOOK - USD/CNY Expected to Rise to 7.55 by Year-End

Forex - RBC Capital Markets strategist Alvin Tan stated that the Chinese yuan is expected to face a challenging year given China's weak economic outlook. "The Chinese economy continues to be affected by the real estate crisis and weak consumption, and it is hard to see this fundamental impact ending this year." According to Tan, a new U.S.-China trade war seems likely to emerge this year following Donald Trump's inauguration as U.S. President on January 20. RBC forecasts that the spread between U.S. and Chinese 10-year bond yields will continue to widen due to the People's Bank of China's more accommodative monetary policy and the Federal Reserve slowing down the pace of interest rate cuts, expecting USD/CNY to rise from the current level of 7.2995 to 7.55 by the end of the year.