USD/CNY: A Biden win could boost Yuan – Deutsche Bank

Analysts at Deutsche Bank offer probable outcomes of the November US Presidential election and their impact on the Chinese yuan against the greenback.

Key quotes

“A Biden win in the US presidential election would lead to a weaker USD/yuan, irrespective of which party controls the Senate.”

“If Biden wins but the Senate stays in the hands of the Republicans, the result is less aggressive fiscal policy but likely places more pressure on Fed to ease again. Thus, meaning more pressure for CNY strength.”

“If Biden wins and Senate majority switches to Democrats, it would result in larger fiscal stimulus, which would weigh on USD/yuan and also would boost EUR and yen.“

"If China and the US still embrace the 'decoupling' momentum set in train by Trump, this is negative for USD reserve accumulation and enhances the spillover from USD/CNY onto strength in other reserve currencies."